THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


REPORT 
I 

T  OF    THK 

t  irESTlMONY  AND  PROCEEDINGS 


TAKEN   BEFORE  THE 


mate  Committee  on  Constitutional  Amendments,  relative  to 
Senate  Constitutional  Amendment  No.  8,  abrogating  pro- 
visions of  Constitution  as  to  Railroad  Commission,  and 
placing  Distance  Tariff  in  Constitution. 


Senate  Committee  on  Constitutional  Amendments: 

IbENATORS  EARL,  Chairman;  HART,  CARPENTER,  SEAWELL,  BURKE. 
Fred,  J.  Martin,  Clerk. 

Luke  Xavakagh,  Official  Stenographer. 


I  N  DEX 


:\ 


Page 

Advertising,  S.  F.  &  N.  P.  Ry ___        73 

Amendment  No.  8,  Original __    xvii 

Substitute ; xxiii,  14 

"  defects  in 116 

general  effect  of 3  7  ig 

eflFect  on  C.  &  C.  R.  R.  Co '    '42 

C.  &  L.  R.  R.  Co 45 

E.  R.  &  E.  R.  R 106,  107,  111 

N.  C.  N.  G.  R.  R 67 

N.  C.  O.  Ry.  Co 48 

"        N.  P.  C.  Ry.  Co 85 

"        Pac.  C.  Ry.  Co. 66 

S.D.C.&E.Ry 89 

"        Redondo  Ry 86 

S.  F.  &N.  P.  Rj' 70,  79,  82 

"        So.  Cal.  Ry. ._ 62,  51 

So.  Pac.  Co. 3,  17,  145,  164,  165 

V.  &T.  R.  Co 95 

Yreka  R.  R.  Co 39 


g 


ea 


B. 

Ballast,  Cal.  lines 6 

"       N.  C.  N.  G.  R.  R 68 

"       So.  Cal.  Ry 50 

Barry,  T.  F.,  statement  of 156,  186 

Bender,  D.  A.,  statement  of 41 

Bonded  Debt,  C.  &  C.  R.  R.  Co 41 

"      C.  &  L.  R.  R.  Co 44 

"      E.  R.  &  E.  R.  R.  Co 104,  110 

"  "      N.  C.  N.  G.  R.  R.  Co 31 

"      S.  F.  &N.  P.  Ry 69 

"      S.  P.  Co -.  175,  176,  177 

"      V.  &T.  R.  R.  Co - --- 91 

Buck,  S.  M.,  statement  of.. - - -.-      104 

Burgin,  J.  F.,  statement  of 69 

Burrows,  A.,  statement  of... --• 30 


California,  assessed  valuation  . - 2      15 

"  climate - 67,  140 

development  of.... - 59,  62,  131,  141,  142,  155 

"  immigration -- --      142 

"  land  available  for  cultivation - 49,  63 


852907 


IV  INDEX. 

Page 

California  land  holdings -.. 141,-144 

"                      "              tenant  farmers 143 

"                      "              Spanish  grants 145 

Pacific  R.  R.  {see  S.  P.  Co.) 

"           topographical  classification 131 

Capitalists,  opinion  of  California. 146 

Capital  stock,  N.  C.  N.  G.  R.  R 32 

So.  Cal.  Ry 63 

So.  Pac.  Co 29,  173,  174 

Carson  &  Colorado  R.  R.  Co. : 

History  of. ... ,...  41 

Earnings  of 41 

Bonded  debt 41 

Effect  of  Amendment  No.  8 42 

Expenses 42 

Rates... ._ 42 

Public  clamor 42 

Cost  of  road... 41 

$4,000  provision 43 

Extensions.. 43 

Central  Pacific  R.  R.  (see  S.  P.  Co.) 

Chicago,  growth  of 142 

Classification,  Western 9,  17,  20,  27,  120,  127,  157,  159,  190 

"                       "      effect  of  change  in 10,  12,  27,  158,  162,  190,  205 

"               definition  of 120 

"               local 160 

Coal  (see  Fuel). 

Comparisons  with  other  lines.. 4,  75,  134,  135,  137,  141,  147,  148,  149,  167,  170,  171,  178,  185 

Collier,  Wm.,  statement  of 59,  112 

Construction,  cost  of  (see  Railroad  Construction). 

Competition,  N.  P.  C.  R.  R 85 

"            Pac.  Coast  Ry.. 65 

S.  V.&  N.  RRy.. 74,  78 

"             So.  Cal.  Ry. 61 

So.  Pac.  Co ^..  161 

V.  &  T.  R.  R.  Co Z...  91,96 

Colusa  &  Lake  R.  R.  Co. : 

Effect  of  Amendment  No.  8 45 

Bonded  debt. 44 

Earnings 45 

Rates 44 

.$4,000  provision. 45 

Return  on  investment 45 

Wages 44 

Legislative  regulation 40 

Cost  of  road 44 

Extensions 45 

History  of 44 

Cost  of  rail 44 

Curtis,  W.  G.,  statement  of.. 130 

Curvature,  N.  C.  N.  G.  R.  R 66 

So.  Pac.  Co 132 

D. 

Desert  land  in  California 63,  131 


INDEX.  V 

Page 

Dividends:    E.  R.  &  E.  R.  R. 104,  112 

N.  C.  N.  G.  R.  K.. '    31 

S.  F.  &  N.  P.  Ry 79 

"  So.  Cal.  Ry. 63 

"  So.  Pac.  Co .- _ 171 

"  Yi-eka  R.  R 39 

Dolbeer,  John,  statement  of 49,  no 

E. 

Earnings:   C.  &  C.  R.  R.  Co. 41 

C.  &  L.  R.  R 45 

E.  R.  &  E.  R.  R 105,  110,  HI 

N.  C.  O.  Ry 46 

N.  C.  N.  G.  R.  R ...32,67 

"         Pac.  Co.  Ry. 65 

"         S.  D.  C.  &E.  Ry 89 

S.  F.  &  N.  P.  Ry 71 

"         So.  Pac.  Co 172 

"         Traffic  Association 4,25,197,224 

Eastern  railroads  (see  comparisons  with  other  lines). 
Eel  River  &  Eureka  R.  R.  Co. : 

History... 104 

Bonded  debt '. 104,  110 

Dividends 104,  112 

Rates 105,  110,  111 

Earnings  and  expenses... 105,  110,  111 

Extension 105,  111 

Etfect  of  Amendment  No.  8 106,  107,  111 

Legislative  regulation 107,  108 

Railroad  Commissioners... 109 

Cost  of  road 110 

Efficiency  of  employes 67,  134 

Expenses,  public  observation  of .- 139 

Expenses:   C.  &  C.  R.  R 41,42 

E.  R.  &  E.  R.  R - 110,  111 

N.  C.  0.  Ry - 46 

N.  C.  N.  G.  R.  R 31.  67 

S.  D.  C.  &  E.  Ry 89 

S.  F.  &  N.  P.  Ry... 71 

S.  P.  Co 139,  167 

Extensions  {see  Railroad  Extensions). 

F. 

Farmers,  tenant  (see  California  Land-holdings). 

Ferry  expense:    N.  P.  C.  R.  R -.        85 

S.  F.  &  N.  P.  Ry 73 

So.  Pac.  Co 141 

Figures  in  the  Constitution .  98,  120,  218 

Four  thoiisand  dollar  provision : 

General  application 14,  2.3,  2S,  117,  189,  210,  217 

C.  &  C.  R.  R.  Co 43 

C.  &  L.  R.  R 45 

N.  C.  N.  G.  R.  R -  -- 31,38 

N.  C.  0.  Ry - 47,  129 


VI  INDEX. 

Page 

Four  tliousand  dollar  provision — continued. 

S.  D.  C.  &-E.  Rj' - 89 

-  Pac.  Coast  Ry.'.. 64 

V.  &  T.  R.  R.  Co 93 

YrekaR.  R . 89 

Freight  rates  (see  Bates,  freight). 

Freight  traffic  {see  Traffic,  freight). 

Freights,  reduction  in  by  proposed  tariff  (see  Effect  of  Amendment  No.  8). 

Freeman,  D.,  statement  of 61 

Fruits,  California...' 88,  91,  131,  153 

Fuel,  cost  and  performance  of; 

S.  P.  Co 134,  169,  170 

So.  Cal.  Ry. 50,  53,63 

Pac.  Coast  Ry 65 

N.  C.  N.  G.  R.  R ..   67 

•  S.  F.  &  N.  P.  R.  R 71,  76 

IS.  P.  C.  R.  R 85 

Redondo  Ry. 87 

Traffic  Association .  4.  6,  25,  195,  223 

Fuel,  J.  S.  Leeds'  error 135 

Fulton,  J.  M.,  statemeiits  of 46,  114,  128 


G. 

Garnsey,  L.  T.,  statement  of 86 

Gesford,  H.  C,  statement  of 1,  14,  214 

Gillis,  H.  P.,  statement  of 39 

Grades:  S.  P.  Co.... .132,  168 

So.  Cal.  Ry 51,  58,  62 

Pac.  Coast  Ry 65 

N.  C.N.G.... -^ --        66 

S.  F.  &N.  P -  -        74 

N.  P.  C.  R.  R 85 

Redondo  Ry 86 

SneathRy 229,230 

Grass  on  track,  P.  C.  Ry. 65 

Gray,  Richard,  statement  of 150 

Gross  earnings  {see  Earnings). 


Immigration  {see  California — Immigration). 

Indiana,  topography  of — 131 

Interstate  Commerce  Commission,  comparative  statistics 138 

Investment,  return  on  : 

Reasonable  - 28,150 

So.  Pac.  Co 173,  179 

0.  &L.  R.  R.  Co -        45 

So.  Cal.  Ry .-- -        59 

Pac.  Coast  Ry 65 

S.  F.  &  N.  P.  Ry.. --        79 

S.  D.,  C.  &  E.  Ry .-        89 

Iowa  Railroads ...60,  113,  148,  166 


INDEX.  VII 

Page 
J. 

Johnson,  C.  0.,  statement  of. 64 

.Johnson,  Grove  L.,  statement  of 90 

Jones,  E.  W.,  statement  of •- 43 

K. 

Kansas — Assessed  valuation  and  population 152 

Railroads,  etc -- ...131,161,165,  178 

Rates - 125,126,162 

Kidder,  J.  F.,  statement  of.- -- - 66 


Land-holdings  (see  Cal.  Land-holdings). 

Land  slides,  S.  P.  Co - 133 

Lansing,  G.  L.,  statement  of.. ^- 104 

Labor  expenses: 

S.  P.  Co -— — -134,  147,  168 

Pac.  Coast  Ry 65 

So.  Cal.  Ry - -- - - 6S 

C.  &.  L.  R.R -•- 44 

Redondo  Ry --  -- 87 

Sneath  Ry - --- --- -        231 

Leeds,  J.  S.,  statement  of --- 2,  24 

"  letter  of ---- -- -        1^'^ 

comments  on... 68,  97,  115,  128,  130,  135,  151,  155,  156,  165,  169,  187,  188 

Legislative  regulation  of  railroads: 

Traffic  Association - --22,  202. 

N.  C.  N.  G.  R.  R 32 

C.  &L.  R.  R.  -. - ---        40 

So.  Cal.  Ry.  - -- ^0 

Pac.  Coast  Ry 64 

S.  D.,  C.  &E.  Ry. - - ^ 

V.  &T.R.  R... - - .....91,92,94,102 

E.  R.  &E.  R.  R - lO'^'  108 

Lines  in  Oregon  (see  (S.  P.  Co.) 

Logging  railroads - 

Los  Angeles  Terminal  Railway : - -      112 

Minnesota,  Wisconsin  and  Iowa  railroads 113 

Railroad  extensions -- - 


M. 

Maintenance,  cost  of: 


65 


Pac.  Coast  Ry. -- -■ 

N.  C.  N.  G.  R.  R ^ --- - - ^     ^^ 

S.  F.  &N.  P.  Ry... -- '^1'  '^'^ 

S.  P.  Co - 140 

Martin,  J.  C,  statement  of .-. - - 

Materials,  cost  of: 

N.  C.  0.  Ry -  - ll'' 

S.  P.  Co - 1^^ 

79 

Mellersh,  Thos.,  statement  of - 

113 
Minnesota  railroads -- - -- " 


VIII  INDEX. 

Page 
N. 

Net  earnings  {see  Earnings). 

Nevada-California-Oregon  Railway  Co.: 

Effect  of  amendment  No.  8 -. 48 

Earnings  and  expenses 46 

Rates 47 

Four  thousand  dollars  provision 47,  129 

Traffic .- 46 

Cost  of  road  .-_ .-. , 46 

Extensions .._  48 

History  of 46 

Rail,  cost  of ..48,  115 

Train  loads 48 

Ties 47,  115 

Materials,  cost  of 115 

Nevada  Co.  Narrow-Gauge  R.  R.  Co. : 

Effect  of  Amandment  No.  8 67 

Ballast 68 

Bonded  debt 31 

Capital  stock 32 

Curvature 66 

Dividends...  31 

Earnings  and  expenses .32,  67 

Fuel.... 67 

Efficiency  of  employes 67 

Rates -. 32,  66 

Traffic 46 

Four  thousand  dollars  provision 31,  38 

Grades 66 

Legislative  regulation 32 

Cost  of  maintenance... 67 

Physical  characteristics 66 

Cost  of  road 31 

History  of... ..31,66 

Rainfall 67 

Snow  blockades 67 

Right  of  State  to  fix  rates 33 

Ties 68 

Northern  California  Railway  {see  S.  P.  Co.) 

Northern  Railway  {see  S.  P.  Co.) 

North  Pacific  Coast  Railroad  Co 85 

Rates 86 

Effect  of  Amendment  No.  8 85 

Competition 85 

Ferry. 85 

Fuef 85 

Grades — .  85 


Oak  timber,  costjof,  S.  P.  Co - 137 

Operating  expenses  {see  Er'penses.) 
Oregon  &  California  Railrod  {see  S.  P.  Co.) 
Oregonian  R.  R.  {see  S.  P.  Co.) 


INDEX,  IX 

Page 
P. 

Pacific  Coast  E.y.  Co. : 

Effect  of  Amendment  No.  8 .  66 

Earnings 65 

Fuel 65 

Four  tliousand  dollars  provision 64 

Grades.. ,  65 

Grass  on  track 65 

Keturn  on  investment.. 65 

Wages 65 

Legislative  regulation 64 

Maintenance,  cost  of .-. 65 

Competition 64 

History  of 65 

Ties 65 

Passenger  rates  {see  Bates — passenger). 

Passenger  traffic  {see  Traffic — passenger). 

Perris,  F.  T.,  statement  of 54 

Physical  characteristics: 

So.  Cal.  Ry ...58,  62 

N.  C.  N.  G.  R.  R - - 66 

Redondo  Ry - -- 86 

So.  Pac.  Co - - - 125 

Population : 

So.  Cal - --- - 49 

Along  S.  F.  &N.  P -— 71 

Redondo  Ry - -- 87 

S.  P.  Co - -- - 139,  141,  145,  152 

Portland  &  Yamhill  R.  R.  {see  S.  P.  Co.) 

Public  clamor: 

C.  &C.  R.  R - -  42 

S.  F.  (fcN.  P.  R.  R -.- - -- 70,  80 

V.  &T.  R.  R -  101 

S.  P.  Co -- - 154 

Proceeds : 

First  day - - 1 

Second  day --- ---  14 

Third  day  ... - - - ^^ 

Fourth  day 64 

Fifth  day - 103 

Sixth  day _ -.  - -.--  114 

Seventh  day.. -- - --  128 

Report  of  Committee _ —  233 


Railroad  Commission .2,  21,  26,  38,  60,  64,  101,  109,  199,  203 

Rail,  cost  of: 

C.  &L.  R.  R 44 

N.C.O.Ry - - 48 

Railroad,  building  of  competing ■ 9,  103,  119,  —0 

Railroad  extensions : 


C.  &  C.  R.  R. 
C.  &  L.  R.  R. 


43 
45 


N.  C.  0.  Ry - - ^^ 


X  INDEX. 

Page 
Railroad  extensions— continued. 

So.  Cal.  Ry ._. 59,61 

E.  R.  &  E.  R.  R.  105,  111 

S.  D.  C.  &E.  Ry 88 

L.  A.  T.  RJ^  Co 114 

V.  &T.  R.  R 91 

S.  P.  Co.... 181 

Railroad  facilities : 

So.  Cal.  Ky 50 

Redondo  Ry. 87 

S.  P.  Co...^ 146 

Railroads,  cost  of  construction : 

California  railroads 7,  28,  207 

N.  C.  N.  G.  R.  R.  - 31 

C.  &  C.  R.  R 41 

C.&L.R.R 44 

N.  C.  0.  Ry 46 

So.  Cal.  Ry 58 

S.  F.  &  X.'p.  Ry 69,  79 

V.  &T.  R.  R 91 

E.  R.  &E.  R.  R.. 110 

Railroads,  history  of: 

N.  C.  N.  G.  R.  R ...31,  66 

YrekaR.R. 39 

C.  &L.  R.  R 44 

C.  &C.  R.  R. 41 

N.  C.  0.  Ry 46 

So.  Cal.  Ry. 58 

Pac.  C.  Ry 65 

S.  F.  &  N.  P.  Ry 69,  73 

S.  D.  C.  &E 88 

V.  &T.  R.  R 90 

E.  R.  &E.  R.  R 104 

Railroads,  relation  to  the  public: 

So.  Cal.  Ry 51 

S.  F.  &  N.  P.  R\' .- 82 

E.  R.  &E.  R.  R 107 

So.  Pac.  Co.  -. ....131,  153 

Railroads  in  California 7,164 

Railway  Age,  opinion  of. 80 

Rates— freight : 

S.  P.  Co 181 

N.  C.  N.  G.  R.  R. 32 

YrekaR.  R 39 

C.  &C.  R.  R 42 

C.  &  L.  R.  R 44 

N.  C.  0.  Ry 47 

N.  P.  Coast  Ry 85 

V.  &T.  R.  R 95 

S.  D.  C.  &E.  Ry 88 

E.  R.  &E.  R.  R 105,  110,  111 

Sneath  Ry 221 

Rates — passenger : 

General 8,  15,  19,  60,  81 

Yreka  R.  R. 39 

C.  &C.  R.  R 42 


INDEX.  XI 

Page 
Rates,  passenger — continved. 

C.  &  L.  R.  R ^ 44 

N.  C.  O.  Ry 46 

So.  Cal.  Ry.  ..- 50 

N.  C.  N.  Ct.  R.  R 66 

N.  P.  Coast  Ry 85 

V.  &T.  R.  R 95 

S.  D.  C.  &  E.  Ry--- 88 

E.  R.  &  E.  R.  R .105,  110,  111 

S.  P.  Co 150,  181 

Rates— reasonable 23,  26,  29 

S.  F.  &  N.  P.  Ry 71,78 

S.  P.  Co 130,  150,  154 

Rates — reduction  in : 

S.  P.  Co 145,  155 

Relation  of  iS.  P.  Co.  towards  San  Francisco 156 

Report  of  Senate  Committee 233 

Redondo  Ry.  Co. : 

Effect  of  Amendment  No.  8 86 

Fuel 87 

Wages    ... 87 

Ripley,  J.  T.,  mention  of 99,  120,  189 

Russell,  W.  F.,  statement  of 85 

S. 

San  Diego,  Cuyamaca  &  Eastern  Ry.  Co. : 

History  of... 88 

Rates i^S 

Effect  of  Amendment  No.  8 89 

Earnings  and  Expenses 89 

Interest  on  investment  -. 89 

Four  thousand  dollars  provision 89 

Extensions .  .- 89 

San  Francisco,  growth  of 1-12 

San  Francisco  &  North  Pacific  Ry.  Co. : 

Advertising "3 

Effect  of  Amendment  No.  8 TO,  79 

Bonded  debt 69 

Earnings  and  expenses --        Tl 

Fuel Tl,  76,  83 

Traffic 1^^  ^^ 

Ferry "'^'  ^ 

Grades '* 

Cost  of  maintenance 71,  77 

Public  clamor...  '0,  SO 

Population ''■ 

Cost  of  road --- ^9,  79 

Competition  .... '■*'  '* 

Tunnels -  ^_   "^^ 

Train  loads .75,83 

Ties • - "'^^ 

Rates.. .-..71,78 

Return  on  investment ' 

Dividends -  -         '^ 

Relations  to  public •■--- 


XII  INDEX. 

Page 

San  Francisco — relations  of  S.  P.  Co.  toward 156 

Smurr,  C.  F.,  statement  of I57 

Sneath,  R.  G.,  statement  of 221 

South  Pacific  Coast  Ry.,  (see  S.  P.  Co.) 
.Southern  California  Ry.  Co. : 

Effect  of  Amendment  No.  8 51,  62 

Ballast 50 

Capital  stock 63 

Development  of  California 59,  62 

Area  for  cultivation 49,  63 

Dividends 63 

Fuel 50,  53,  63 

Traffic __ 50 

Grades 51,  58,  62 

Return  on  investment 59 

Wages ....  63 

Legislative!. regulation 60 

Physical  characteristics 58,  62 

Population 49 

Cost  of  road 58 

Relations  to  public 51 

Competition 61 

Facilities  required 50 

Extensions 59,61 

History  of...  58 

Train  loads 51 

Washouts 50,  59 

Southern  Pacific  of  Cal.  (see  »§.  P.  Co.) 
Southern  Pacific  of  Arizona  {see  S.  P.  Co.) 
Southern  Pacific  of  New  Mexico  {see  S.  P.  Co.) 

Southern  Pacific  Company 116,  130,  150,  157,  164 

Amendment  No.  8,  effect  of 145,  164,  165 

Ties 140 

Capital  stock ..173,  174,  178 

Fuel 134,  169 

Fuel,  J.  S.  Leeds'  error 135 

Earnings 172 

Four  thousand  dollars  provision 117,  124 

Figures  in  the  Constitution 120 

Return  on  investment I73,  179 

Wesetrn  Classification 120,  127,  157,  159,  162 

"  "  local 160 

Omission  of  ore 121,  159 

Bonded  debt 175,  176  177 

"Wine  rate 121 

Rates  computed  over  shortest  distance    122 

Kansas  tariff 125,  126,  162 

Kansas  railroads  ... 165 

Physical  characteristics 125,  LSI 

Iowa  railroads _ ..148,  166 

Rates— reasonable ...130,  150,  154 

California  productions 131,  158 

Relations  to  the  public 131 

Topography  of  California 132,  161 

Grades 132,  168 


INDEX.  XIII 

Southern  Pacific  Company — continued. 

Tunnels I33 

Curvature ... _ _ 132 

Wastiouts,  land  slides,  and  snow  blackades I33 

S.  P.  C.  Ry "Z'"l"/"l33,  163 

Cal.  Pac.  R.  R. ....133,  163 

Labor  expenses I34,  137^  168 

Materials,  cost  of I37 

Oak  timber,  cost  of I37 

Comparison  by  statistics I39 

Population  and  traffic,  Pacific  coast 139 

Operating  expenses 139,  167,  169,  171 

Expenses,  public 'observation  of 139 

Snowsheds  and  snow  service 140 

Ferry  expense 141 

Development  of  California 141,142,153,155 

Poi^ulation,  railroad  mileage,  and  assessed  valuation 141 

Growth  of  San  Francisco  and  Chicago 142 

Immigration .  142 

Population  of  California,  growth  of.. 142 

C.  P.  R.  R.  Government  debt 179,  227 

Land  holdings  and  tenant  farmers  143 

Spanish  grants ...  145 

Railroad  influence  on  population.. ...144,  145 

Eastern  capitalists 146 

Train  loads ..- 167 

Rates— reduction  in 145,  155,  181,  182 

Railroad  facilities 164 

Effect  of  California  fuel  and  labor  prices  on  Eastern  roads 148,  149,  168 

S.  P.  Co.  outside  of  California  self-supporting 151 

Competition .. 161 

J.  S.  Leeds,  criticism  on 135,  165,  169 

Comparison  with  other  lines 140,  167,  170,  171,  178,  185 

Traffic 168,  183,  185 

Dividends .       171 

Railroad  extensions 181 

San  Francisco,  relations  of  S.  P.  Co.  toward 156 

Snowsheds,  S.  P.  Co 140 

Snow  blockades,  S.  P.  Co 133 

N.  C.  N.  G.  R.  R. 67 

State,  right  of  to  fix  rates,  N.  C.  N.  G.  Ry.... 33 


T. 

Tariff— California  distance  {see  Amendment  No.  S). 

Tariff,  effect  of  in  Iowa —        60 

Tables : 

Freight  rates,  S.  C.  Ry 51,84 

Dividends,  S.  P.  Co..'. 171 

Bonded  debt,  S.  P.  Co.... - 175 

Fuel — cost  and  performance  of,  S.  C.  Rj'^ 53 

"    S.  F.  &N.  P.  Ry 83 

"     S.  P.  Co 135,137,169,170 

Earnings  and  expenses,  N.  C.  N.  G.  Ry... - 67 

S.  P.  Co 169,171,172 


XIV  INDEX. 


Tables — continued. 

Kansas  railroads  capitalization. _ -. -  178 

Population,  etc.,  S.  F.  &  N.  P.  Ry 71 

"      S.  P.  Co 142 

Ties,  S.  F.  &N.  P.  Ry. .    83 

"    S.  P.  Co - 141 

Steamers,  cost  of  operating,  S.  F.  &  N.  P -.- - ---  83 

Train  loads,  S.  F.  &  N.  P.  Ry... - -.- 83 

Traffic,  S.  P.  Co... 185 

Topography  of  California  (S.  P.  Co.) 132 

Wages  in  California  and  Illinois  (S.  P.  Co.) 147 

Effect  of  California  conditions  on  Eastern  roads  (S.  P.  Co.) 148,  149 

Tenant  farmers  {see  California  land  holdings). 

Traffic  Association 2,  3,  5,  11,  18,  29,  116,  154 

Ties,  cost  of: 

In  California 6 

N.  C.  0.  Ry 47 

N.  C.  N.  G.  R.  R ' 68 

Pac.  C.  Ry... 65 

S.  F.  &N.  P.  Ry 77 

S.  P.  Co - 141,  191 

Topography  (see  California  Topography). 

Traffic — freight  and  passenger: 

N.  C.  0.  Ry.. .-  46 

So.  Cal.  Ry 50 

S.  F.  &  N.  P.  Ry 75,  80 

S.  P.  Co ....139,  168,  183 

Train  loads: 

N.  C.  0.  Ry 46 

So.  Cal.  Ry. 51 

S.  F.  &N.  P.  Ry 75 

S.  P.  Co 167 

Tunnels,  S.  F.  &  N.  P.  Ry 74 

S.  P.  Co. 133 

V. 

Visalia  &  Tulare  R.  R.  Co. : 

History  of 90 

Cost  of 91 

Bonded  debt... 91 

Fruit 91 

Extensions .. 91 

Competition .._ 91,  96 

Le.Lnslative  regulation... 91,  92,  94,  102 

Four  thousand  dollars  provision .  93 

Effect  of  Amendment  No.  8 95 

Rates 95 

Figures  in  the  Constitution 98 

Railroad  Commission 101 

Competing  railroads 103 

J.  S.  Leeds... 97 

Volume  of  traffic  (see  Traffic). 

W. 

Wade,  K.  H.,  statement  of 49 

Wages  (see  Labor  Expense). 


INDEX.  XV 

Page 

Washington,  immigration  to -- -. 142 

Washouts.  S.  C.  Ry - -- -- 50,59 

S.P.Co -- --- 133 

Waterman,  W.  S.,  statement  of 88 

Wine  rate -- 121,214 

Wisconsin  railroads - - 113 

Wood  {see  Fuel). 

Woods,  W.  S.,  remarks  of 128 

Y. 
Yreka  Railroad  Co. : 

Effect  of  proposed  amendment 39 

Dividends 39 

Rates - - -- 39 

Four  thousand  dollars  provision 39 

History  of - ■ - 39 


Senate  Constitutional  Amendment  No.  8. 


INTRODUCED  BY  MR.  GESFORD,  JANUARY  11,  1893. 

BBFEKRED    TO    COMMITTEE    ON    CONSTITUTIONAL   AMENDMENTS. 


A  RESOLUTION 

Proposing  to  the  people  of  the  State  of  California  an  Amendment  to  the 
Constitution,  repealing  Sections  S3  and  23  of  Article  XII  of  said  Con- 
stitution, relating  to  the  Railroad  Commission,  and  adding  to  Article 
IV  of  said  Constitution  a  new  section,  to  be  known  and  numbered  as 
Section  36,  relating  to  railroad  freights  and  fares. 

Resolved  by  the  Senate,  the  Assembly  concurring.  That  tie  Legislature 
of  the  State  of  California,  at  its  thirtieth  session,  commencing  on  the 
second  day  of  January,  A.  D.  eighteen  hundred  and  ninety-three,  two 
thirds  of  all  the  members  elected  to  each  house  of  said  Legislature 
voting  in  favor  thereof,  hereby  proposes  that  sections  twenty-two  and 
twenty-three  of  article  twelve  of  the  Constitution  of  the  State  of  Cali- 
fornia be  repealed,  and  that  said  Constitution  be  amended  by  the  addi- 
tion thereto,  and  to  article  four  thereof,  of  a  new  section,  to  be  known 
and  numbered  as  section  thirty-six;  said  proposed  new  section  to  read 
as  follows: 

Section  36.  It  shall  be  the  duty  of  the  Legislature,  at  the  first  regu- 
lar session  thereof  after  the  adoption  of  this  amendment,  to  prescribe 
the  rates  of  fares  to  passengers,  and  to  provide  a  classification  of  prop- 
erty, and  to  fix  and  determine  the  rates  of  freight  to  be  charged  for  the 
transportation  on  all  railroads  in  the  State  of  California;  and  until  such 
legislation  shall  be  enacted  and  go  into  effect,  or  whenever  no  such 
enactment  shall  be  in  operation,  the  charges  of  transportation  by  such 
railroads  shall  be:  For  the  transportation  of  passengers,  not  more  than 
two  cents  per  mile;  and  the  charges  for  freight  and  merchandise  shall 
not  be  more  than  the  charges  specified  in  the  distance  tariff  in  this  sec- 
tion hereinafter  mentioned  and  set  forth,  the  same  being  hereby  desig- 
nated as  "The  California  Distance  Tariff."  The  classification  referred 
to  in  said  California  Distance  Tariff  is  that  adopted  and  issued  by  the 
Western  Classification  Committee  (of  which  J.  T.  Ripley  was  Chairman), 
and  which  took  effect  January  first,  eighteen  hundred  and  ninety-three. 
Said  California  Distance  Tariff,  including  the  rules  forming  a  part 
thereof,  and  governing  the  same,  is  as  follows,  to  wit: 

CALIFORNIA    DISTANCE    TARIFF. 

Applicable  to  local  traffic  between  all  stations  in  the  State  of  Cali- 
fornia, subject  to  the  Western  Classification  and  the  rules  govering  the 
same,  which  took  effect  January  1,  1893: 


XVIII 


, 

o 

at 

n 

u 

c 

m 

c 

ftU 

M 

a> 

c 

oj 

"-* 

o 

« 

w 

w 

1 

"O 

(U 

■o 

a; 

h-l 

o 

tL( 

Sheep    (Single     Deck 
Cars) 


Cattle  and  Hogs  (Single 
Deck  Cars,  as  to  Hogs) 


Horses  and  Mules. 


10>OCC>COr^t-0000050500'-l-H(MMCCCC-t<l01ir5i«CCCCI^r~t~ 


CO-^T*<ir5CO®t^t^OOOOOi0505000'-l--H.H(MlM(MCOCOTj<-*-<^ 


CO-^-^lOCOCOt^t^OOaOOiOJOOTH^C-IC^ICO-^Ttl-^lOlOXlCOiX) 


So 


►2'^ 


stone  and  Brick  (com- 
mon or  pressed),Sand 
Clay  (common)  


(NCqiM<MCCie<5COCOeO-*-*-*iOiO>OiOiOCOCO«OCC'<rit^t~-t^l:^t^ 


Barley,  Rve,  Oats, 
Corn,  Mill  Stuffs, 
and  Chops 


(M<MC<lC-1COCO-*-*-*lC>CVCCDXCr>CDC0t-I:^CCcC000000O5(r505 


Wheat, Flour,  Flaxseed, 
Castor  Beans, Broom- 
corn  Seed,  and  Beans. 


C<liM0tic0-*iTj<iOiOVO«C0C0t--t^t:^t~l:^0000a5O0iOOOOO 


Coal. 


C-lC<)COCOCOCCCOCOTj<-*Tt<T*<lClCilO>n>OCOCDC3CDCDt^t~t~t^t- 


Salt,    Lime,    Cement, 
and  Stucco.- 


fOCOeO-*lOiOCD»Ot^t-t^OOXCCOOCRa;CiOO'-l'-l'-l(N(N(M 


Lumber,     Lath,     and 
Shingles 


cocococci-*-*Tt<-<*<mioic®cccat^i^t^ooooc60iOoo^T-(,H 


Class  E. 


coc(5ar>ooMcocOcc-*<-^Tf<iOicmiCiOCD®:Dr-l:^l^t-cccccooo 


Class  D  . 


COXiCOCO-*Tj<lCmCOCO;OCOt^I:^t-r~-OCCCMCOC:C32050000 


Class  C. 


COOtlCO-*10lOCOCOJ>t^CCOOC0050ia>00— lrH^(M!MCOCOC0-^ 


Class  B. 


COCOTtiiOCO:Ot^t^Q00005a500^<-l<MCOtO-*^»C«5(©J>-t^OO 


Class  A. 


Fifth  Class. 


Fourth  Class. 


ess 

,-lrHTH^T-l,-(,H,H,-l,-l(M(N(MC~l(M(M<M(MC-lC<lC<l 


Third  Class 


CO-<*<C005-HCO-*:Ot-C0050-H'M'rC-t'lO»r~00050'-IC<lC-lCOOO 
iHi-ltH,HT-(T-(rH(M<N<M(N(MC5(M!N<M(NCOCCCOCOiWeO 


Second  Class . 


THT-iTHrHTHi-HC^c^c^e^iC'ic-iiMiMccicoooeococococococo 


■Bo 


First  Class . 


(»iKQoa)cnt«coOTcocncrjOT«cncQOTWcQccccOT»3mtnOTQQ 


(U 

0) 

a; 

OJ 

OJ 

V 

n 

Oi 

OJ 

0) 

0) 

0 

<u 

0) 

OJ 

0) 

o 

<D 

0) 

0) 

OJ 

a; 

OJ 

O) 

0) 

a> 

a 

s 

£ 

^ 

£ 

£ 

£ 

£ 

£ 

£ 

£ 

g 

£ 

g 

g 

s 

H 

£ 

g 

£ 

g 

g 

r^ 

g 

g 

a 

JlOOlCOiflOiOO 


>cccoi:^i^«ocCTia;oo— '- 


JOOOOOOOOOOO 
ic3c3c3c^c3c3c3c3c3c3c3 


>  > 


on  (U 
!>  > 

o  o 


;h  ^  ^ 

OJ  OJ  d) 

>  >  > 

o  o  o 


(D  oj  a> 
>  t>  > 
o  o  o 


o  o 


S'^tz^'o'^'G't^'^'C't^'Gt)'^ 


(3  c3 


S££££££££££££S££S£££££S££S£ 

lOOiOOlOOlCOmOlOOlOOlOOmOlCOlOOlCOiCOlO 


XIX 


th  ^  rH  ^  (N  c<i  a^  cvi  c<i  e<i  <N  <>?  <^l  (N  <N  (>q  N  cq  c^  c^  M  M  S  ^  S  c-1  c<i  M  ?i  S  S  S  K  M  M  §5  m  M  M 


■*10>0>OOCDCDt^r^t--£^OOC0050303000'-^'^-H<>lC<ie<IC^OOCOCOCOM'-^'^'^lO>0'ft®Or-t^»-000000 


C^C-lC<l(NC-lC<l(NC<)C^C>10<l(NNC<l(N(NIM(N<N(NMC^(MM(Me~>e^(MC^ 


I:^l>t~l>t^^:^coc»coooooo5C>Oi03a30000o-Hl-(rHT-^.-(>-ll^^c^c-^■^^(^lcocccoMcoTJ^■^•*^^mmlO 

iHt— It— I.— Ii— ItHrHrHi— Ir-li— li— I.H1— (T-li-(>-l,-Hr-(.-(.-(,-(i-lr-(.-(rH^HrHiH 
050505000000^^'— liH»H-^i-lrHC-1C-1C<IC^5C'1C-lCCCCMCCC<t-^Tj<T»<Tfi'^<icvOOCC'CC;CCOt^I^t--OOaDS5 

OOO"— lr-^-^•^T-l^^c-^c<^c<^<^1c<^<^lMcc^^cOTJ^Tt^-^vOlcmlC^cx>;DcocotCl^-^-t^ooooooooo5050500o 

r-^THT-l,-lrtrHTHrM^r-J-^T^-^,-^,-lr-l.-(.-l^-(I-lT-lT-(^Hrt1-l,-l,-(-^r^r-lT-(.-tTH^Hr-(^^-l.-<rtr-(r-(T-H(^^?5<^^ 
OOOOOOC0003000000000C»050505050000-^^'-IC'lC<l<M«COCOCO-*Tf<lOlOlClOmOCOtf>»  o  CD  r^  t-  ?- 

(^^cClCOcoco(^o■*■*■*^^lOlO^CDCD^^t^t^oooooo05o:05  0  0-J'Hl-lc•■|Mcococc^■^lOlOcoco«^^^^^- 

~~"  S  ^^  ^  ^ 

C0050505050500000'-<i-l(NlMC^"lCOCOCO-#-tti^iniClOtCOCDCOt-t^0000000005aiO;05000-H'-l-H 

iH^rH.Hi-li-I.HTH>-lT-lT-l7HT-l,-l.-lTH,-lrHi-(T-l.-li-liH.H.Hr-l,Hi-I.Hi-li-lT-l,HC^(N(NC''llM(M 

• 

,H-4^'H.-liHC<l(M(M<MC<ICOCO-*^>ClOXii:DCC>t-t^OOOOC0  05  0505050  OVH  --(  t-i  —<  IM  (M  !M  CI  M  CO  CO  "I"  ^  ^ 
Tt(-<*lOlO>0<:DJXlt~t~t^0000050'-lrH(MCO-t<-t<iOlCCO:Ot^t^a;3000500-H'-<^(NC^COCO-<!t<Tj<rJ<lClCtO 

,HlHT-(^H^-lT-(l-(r^TH.-ll-lr^I-lc^c<^(Nc^^c<^<^^c-^c<^(^lc^(^^c-lc-1!^^c■^^^!^^cococococococococococococococo 


^^,Hl-(c<lc<Ic^^c<^c<^c<lc^^(^^c<lc<^c<^c<^c^^(^lcocococococococococococococococOTf^■<j^TP■^■*TJ^rJ^M^■*-*■* 

ioiccDcor-t^cca3C500'-i!^ico-*iocDr^oo050^^co-*ioi3r^ooo;0'r-i'-(c-:i<Mco-^io;Dt--r^ocQOc:o»H 

C^<N(MC<)C^(MC<IC^lC<ICOCOCOCOCOCOCOCOCCCOCO'*-^^-q<-*^-<*"-^Tj<lOlOlOiOlOlOiOiOlOWiCvCmiCw» 

eOCOTt<-*miOX):^l^GOOOa50i-HMCO-*VO<lOt^C0050i-l<MCO-*lCCDt^000005050'H(NCO-*Tj<lC10CCt-00 
<NO^l^^C<^C^^C^10-lC-1C^^(^^C^C<^COCOCQOOCOCOMCOCOCO■|*lTt^■^■<*^T^^Tt^^TJ^■^*^TJ^TJ^■^lO^OlO^O>Oln>O^O^r;lC^O 

OOC»050500'-IC<)C<ICOCO-#lOCOt-00050-r-l(MCOTt<lOCOI>-OOC50rH<NC<:iCO-^TtimOt^OOC20500wC-1CO 

<>j(Nc<ic<)cococococococococi:)cocococo-*'*-*'*'*i-*-*-*-*-^inioino»cioioicioioio»co5D;DX;;stD 
• 

Tfl-*lOlCCDt-00050500'-IC^CO-*»OCOt^00050r-(C1COM<l05£I^000500'- '-H(MCOTt<lOCCr-QCSCC:0'-l 

cococ'5cocococococo-^Tji-jj<'*'^'*'^"*'*'a<''*''OioioiC"OiO"Oioiomcsco:2  0  0co!D!Dcc:c;£;sot^r- 

050500'-lc<lcOT^|'*|^o:or~^oO'-||^^co■*l^coooo50r-^'^^■^J<uoot^ooO'Hc-^coTfllOcot^ooC30-^Nco■<l^ 
cocO''^''^Tt<"^"^Tf-rjiTt<'^'^''^ooioooioioioiococD;OsDc^ococDt^t>*r^t^t^t^t^t^t^i^coQOcxiGooo 

00050^^C^COTjtlOCOt^Oca50(M-*lftCC00050C<lC<5lOCOC»Oi-ICOTt<lftt^050'r-IC^1-*int°00<-IMCO-^;0 
Tt<Tj<lOmuOmiOlOlO"OlCiOCOCC>COC01©tDCOI>-r~t^t~t— t~OOOOOOOOCOOOOOro05050505050500  00  00 


SSSS3SS£SSSSHSSSSSSS3SSSES5SSSSSS£SSS£S5££SSa 

lOOiOOiOOiOOlCOoOiCOOOOOOOOOOOOOOOOOOOQOOOOgOOpOOOC; 

S^^I^55KScctit--MSroa:o^51co^io-ot^wo5o-^C'icoTt<ioot^occ50'-ic-icc-rt<u':!--rt-2££o^ 
iJ3S-^^JHi^I-lT-lT4i;!-^-HC^c-^c^1(^lC^MC^^c~^c^c<lcocococococococococ^ 


^  ;h  ;h  tH  t4  ;h 

a?  <li  o  <D  Q^  o 

>.  t>  !>  >  P>  >' 
000000 

el  n  c  c  a  c 

o3  ^  c^  ^  ^  ^ 

m  K  M  uQ  M  w 

CJ  CJ  1>  1>  ^  u 


;h  ^  b  h  ;h  ^ 
o)  m  a>  a>  Qj  oj 
>>>;>(>> 
o  o  o  o  o  o 

■G  '73 'C  t3  T3 '^ 
S  C  C  C  C  C 
c3  ^  ^  c^  c3  ?3 


C-)  C-)  CM  C-l  iM  <M  (M  C~)  (M  (M 

>  t> 

O  O 


fc<    !-.    Sh 

oj  OJ  a> 
>  >  > 
000 


fc<      fc<      ^H      t^ 

o)  <u  1)  a> 
>  >  i>  > 

0000 


CO  CO  CO  c 

(U  m  CD 
>  t>  > 

o  c  o 


tn  ^  ^  ;-. 


)C0COCOCOCOCO^-:t<Tf<T}<Tf< 

(h  ;h  ^  ;h  ^ 

(D  GJ  <X)  O  Q^ 
>  >  >  >  > 
00000 


1-,    ^    ;-    ;h    k. 


>  >  > 

coo 


0000000000 


'G'T3'0'T3'073'CO'0't3'Orr'G~'7;'^'5'^'0'a'5'0'C'w'G'C 


cccc 


'O'T'nS 
C  C  (3 
ai  c3  c3 

03    Ol    03 

(D    a;   4) 


S£'£££££a£E£££S££S£E£££££S£££££S££££SE£££S£££a 

/-\w-^r^io(—5w-ic^iftc^i^omo0'000000000000  000  000000000  0000000 

§-SoSSSSSSSSroSTHSco^^cDi^SSoi=H'>;co^o:r:t-oooo'-;:^'"2'^^t:2SQ':5<=a 

SSiy)3i^^I-lUliHiHjHSSSSc^Sc<IC^<NC<I?qcOCOCOCOCOCOCOCOCOCO-'3<-<»<-* 


Sbcep     (Single     Deck 
Care) 

r^r^  5 

S  5  3  S 

? 

? 

r3J!J 

r^  rt  rt  -? 

i?!?^ 

r~  t^  oc  X 

? 

Cattle  and  H(^s  (Single 
Deck  Cars,  as  to  Hogs). 

55  gj  S  S  2  5  ^  =  =  a  I.'  ^]  q  £:  S  S  s  2C  ^  S  £  ^  S  S  S  5  E; 

Horses  and  Mules 

Carloads  of  Not  Lens  than  Minimum  Naraod  In  ClaNKlfloatlon,  nor  More  than 
Marked  Capaolty  of  Car— Uatu  por  100  I'oundH,  In  (;ontH. 

Sione  and  Brick  (com- 
mon    or     pressed), 
Sand,  Clay  (common) 

::^           _"_"r 

1:":.^        i:^:^        i-.i;:        :^:^ 

BarlCT.      Eve,      Oats. 
Com.  Mill  StafB,  and 
Chops 

Wheat.  Flour.Flaxseed, 
CastorBean-,  Broom- 
eom  Seed. and  Beans. 

?iv>  Tx  Tl  ?'  ?i  i\v,  ?\  ii?;  ^  i;  ^s  g  §  s  s  s  ?5  ?5  ^ij  s  c5  s 

Coal 

Salt,    Lime,    Cement, 
and  Sracco 

Lumber,     Lath,     and 
Shingles 

Class  Z 

^^'j;      >:;        :s':j;        :^:s^        >:'i^        :^::^ 

Class  D 

Class  C 

Class  B 

$^--5£i£5S^!Jv'5  5-gggggS£g5£g§ 

Class  A 

I;i-xir-.sv;2-.s-.i2r^i^t~t-f~r^t-it^r^t^r^i^t^i^t-t~r~ 

Fifth  Class 

gg.2S5|;gsssrrrrs2SoojHj.^r,c2^^gog 

3>  S 

?■§ 
So  ■ 

So 

Fourth  Class. 

t£  •-=  ^  b;  2  -c  -c  i'  i~  t^  t-  r-  £-;  t-;  S- 1^  t~  ti  ?^  i^  t^  t~  r^  t^  =c  cc  00 

Third  Class 

—  ■>ir:r^-i'is;=i~«c:90— 1— 'M2:2?'j'-j'i-';v.';-.cj:7i:r=cx;« 

Seoxmd  Class 

gg??-5^Hi-]i?Hf:?.5?.?:S|  =  ||S|8|||| 

First  Class 

slslrS^S^-r^iSll^iSlsBBsiSlsB^ 

1 
1 

o 

X    X    X    T 

T 

T 

T.     'f.     T 

X    X    X    X 

■X 

X    X    X 

r 

X    K    X 

1 

00  n 

^-^-HalxlH^EE'EE'EEEEEEEEEEESlI 

ji=:  =  ;:  =  =;  =  =  =  :;::-^  =  =  c;  =  s  =  r:  =  =  c:  =  :;csci 
llllllllllllltlllllllllllll 

iii 

la  ic  "C 

i'lii 

s 

i 

§g2 

S  g  \Z  % 

i 

i~  r^  £- 

2gs 

l-~ 

XXI 


oo-^^c^o^ 

^:  «•*•<*<»»  U2  cr  t^  r~  «  X  c:  s;  »  o     1 

~  —  ~  c M  ^^  c-i  ?j  M 

^5;^:=^^^^^^^^5??^^-^^55 

c^  :^  <M  ^»  I^  M 

_\        X        X        -v_\        X 

XC;35S:SOO-J  —  —  —  flMC^W 

g  5  =5  s;  S  S 

:^i;;         i^_^         1--      -f.^ 

:^::^        :^::?        i:^-^      :^:^ 

:^i^ 

\r<^,r<                        ri    ,r«              •  n   ,r« 

"SSSSSg 

^:^        --_-,        i^^^      :s;^ 

OC  X  X  C-.  -  9 

:^:i^        x_^        XX 

0  C  0  —  —  — M  M  M  ^^  M  ?t  ?? 

_  - ^, 

M  fi  rt  rt  —  -  -  —  '^  ^-  ^-   -  -  ~  ■- 

€xxgSS 

c-:^-«?iCtr;~:r:rt^r-xxx~Si 

XXXXXXXXXXXXXX30 

^J^E:?Sj£^p:gi^j5?5?5?55S55SS 

x5?S5ic-x 

xxxxxxxxxxxxx?.  ^ 

ss^ssg 

SSgg5S5=|c^i3|| 

CCSCO-- 

^,  ^,  :^  -  _  ^-  ^  -^  -^  f^  t^  ^  -  _  _ 

-                                                           ] 

^SS^£S 

£:o--rMrt-^i=»^2t-xx~05 

:u  :-:;-:  ;^  :^ ,-: 

j  M  i  1 

"5  S  5  *  5  S 

1      I      I      I      !!      I      J      I      I      I      1      J      1   32 

acaoiasaoxxaExiiSia^x  xJJ 

=.  ^  -V  o  _  o 

W^-CJw.-^^^^O-.'^s.w—    — 

^li§5f 

^-;2t^x— c:  —  ~;??  —  S--rt^X" 

^  r  e  r  r  r 

■-.   L.  L.   1.   ■-■-.:-   -^   ■-■—   z.  ■     i.:.^ 

>>>>>> 

>>>>>>>>>>>>>>c 

"^     *      "      ~      *      ^ 

Z  Z  Z  Z  Z  Z  —  Z  Z  Z  Z  Z  Z  —  ~=- 

c  =  =  =  z  E 

'z.-x----~~x--~~^ 

55  =  5  =  = 

xxxxxxxxxjiixxxj; 

— — — — — — -— ,.^^— -^ — ___ _ 

' 5 

SC  X  X  X  X  X 

X  X  X  X  r.  -  r:  r:  -  r.  r.  c^  r.  r:  — "     1 

XXII 

1.  This  tariff  shall  apply  to  individual  railroads,  in  this  State,  and 
they  shall  be  considered  independently  in  computing  distances,  except 
that  a  system  of  railroads  consisting  of  leased,  operated,  or  independ- 
ent roads,  operated  under  a  common  management,  although  working 
under  different  charters,  shall  be  considered  as  one  road,  and  the  dis- 
tance shall  be  computed  over  the  shortest  oiDcrated  line  composed  of 
two  or  more  of  such  roads. 

2.  When  the  rates  herein  named  and  the  Western  Classification  here- 
tofore referred  to  conflict,  the  rates  named  in  this  tariff  shall  govern. 

3.  Minimum  Charges. — Single  shipments  of  one  or  more  classes  will 
be  charged  for  at  the  actual  weight  at  tariff  rates,  subject  to  a  minimum 
charge  of  twenty-five  cents  for  the  entire  consignment  for  distances  of 
five  hundred  miles  or  less,  and  fifty  cents  for  greater  distances. 

RULES   GOVERNING    SHIPMENTS    OF    LIVE     STOCK    IN   CARLOADS. 


Minimum  Weights. — Horses  and  mules,  cattle,  hogs,  and  sheep 
shall  be  .way-billed  at  the  minimum  weights  named  below,  subject  ta 
correction  at  destination  to  actual  weight,  but  in  no  case  less  than  the 
following  minimums: 


Horses  and 
Mules. 

Cattle  and 
Hogs  (S.  D.) 

Sheep  (S.  D.) 

Cars  27  feet  6  inches  long,  inside  measurement 

Cars  28  feet  long,  inside  measurement. 

17,700 
18,000 
18,400 
18,800 
19,000 
19,400 
19,700 
20,000 
20,300 
20,600 
20,900 
21,200 
21,600 
21,800 
22,200 
22,600 
22,900 
23,200 

16,800 
17,100 
17,500 
17,900 
18,000 
18,400 
18,700 
19,000 
19,300 
19,600 
19,900 
20,100 
20,500 
20,700 
21,100 
21,500 
21,800 
22,000 

10,000 
10.200 

Cars  28  feet  6  inches  long,  inside  measurement 

Cars  29  feet  long,  inside  measurement 

10,400 

1(1  (;no 

Cars  29  feet  6  inches  long,  inside  measurement 

Cars  30  feet  long  inside  measurement                 

i(;»,so<:) 

11,000 

Cars  30  feet  6  inches  long,  inside  measurement 

Cars  31  feet  long,  inside  measurement- 

11,200 
11,400 

Cars  31  feet  6  inches  long,  inside  measurement 

Cars  32  feet  long,  inside  measurement 

11,500 
11,700 

Cars  32  feet  6  inches  long,  inside  measurement - 

Cars  33  feet  long  inside  measurement               

11,800 
12,000 
12,200 
12,300 
12.400 
12,600 

Cars  33  feet  6  inches  long,  inside  measurement 

Cars  34  feet  long,  inside  measurement 

Cars  34  feet  6  inches  long,  inside  measurement 

Cars  35  feet  long,  inside  measurement 

Cars  35  feet  6  inches  long,  inside  measurement 

Cars  36  feet  long  inside  measurement 

12,800 
13,000 

Committee  Substitute  for  Senate  Constitutional  Amendment 

No.  8. 


INTRODUCED  BY  MR.  GESFORD,  JANUARY  11,  1893. 

BBFKEKBD   TO   COMMITTEE   ON   CONSTITUTIONAL   AMENDMENTS. 


A  RESOLUTION 

Proposing  an  Amendment  to  the  Constitution  of  the  State  of  California, 
repealing  Sections  22  and  23  of  Article  XII  of  said  Constitution,  relat- 
ing to  the  Railroad  Commission,  its  powers  and  duties,  and  adding  a  new 
section  to  Article  IV of  said  Constitution,  to  be  numbered  Section  36,  relat- 
ing to  railroad  freights  and  fares. 

Resolved  by  the  Senate,  the  Assembly  concurring.  That  the  Legislature  of 
the  State  of  Califorhia,  at  its  thirtieth  session,  commencing  on  the 
second  day  of  January,  A.  D.  eighteen  hundred  and  ninety-three,  two 
thirds  of  all  the  members  elected  to  each  house  of  said  Legislature 
voting  in  favor  thereof,  hereby  proposes  that  sections  twenty-two  and 
twenty-three  of  article  twelve  of  the  Constitution  of  the  State  of  Cali- 
fornia be  repealed,  and  that  article  four  of  said  Constitution  be  amended 
by  adding  to  said  article  a  new  section,  to  be  numbered  section  thirty- 
six. 

Section  1.  Section  twenty -two  of  article  twelve  of  the  Constitution 
of  the  State  of  California  is  hereby  repealed. 

Sec.  2.  Section  twenty-three  of  article  twelve  of  the  Constitution  of 
the  State  of  California  is  hereby  repealed. 

Sec.  3.  Article  four  of  the  Constitution  of  the  State  of  California  is 
hereby  amended  by  adding  to  said  article  a  new  section,  to  be  numbered 
section  thirty-six,  said  new  section  to  read  as  follows: 

Section  36.  The  Legislature  shall  have  the  power,  and  it  shall  be  its 
duty,  to  establish  rates  of  charges  for  the  transportation  of  passengers 
and  freight  by  all  railroads  operated  in  this  State,  and  to  enact  such 
laws  as  may  be  necessary  for  the  enforcement  and  carrying  into  effect 
of  such  rates;  provided,  however,  that  the  Legislature  shall  have  no 
poAver  to  prescribe  rates  of  charges  for  the  transportation  of  passengers 
on  any  railroad  or  system  of  railroads  whose  gross  annual  earnings  are 
more  than  four  thousand  dollars  a  mile,  to  exceed  three  cents  per  mile; 
and  provided  further,  that  the  Legislature  shall  have  no  power  to  pre- 
scribe the  rates  of  charges  for  the  transportation  of  freight  on  any  rail- 
road or  system  of  railroads  whose  gross  annual  earnings  are  more  than 
four  thousand  dollars  a  mile,  to  exceed  the  rates  specified  by  the  "  Cali- 
fornia Distance  Tariff,"  as  in  this  section  hereinafter  set  forth.  Until 
the  Legislature  shall  prescribe  such  rates  as  aforesaid,  or  in  the  event 
that  any  such  prescribed  rates  shall  from  any  cause  become  inoperative, 


XXIV 

the  rates  of  charges  for  the  transportation  of  passengers  on  all  railroads 

in  this  State  whose  gross  annual  earnings  are  more  than  four  thousand 
dollars  a  mile,  shall  be  three  cents  per  mile;  and  the  charges  for  the 
transportation  of  freight  by  any  such  railroad,  shall  be  the  rates  specified 
in  the  following  distance  tariif,  hereby  designated  as  the  "California 
Distance  Tarifi","  to  wit: 

CALIFORNIA    DISTANCE    TARIFF. 

This  distance  tariff  shall  be  applicable  to  local  traflSc  between  all  sta- 
tions in  the  State  of  California  now  established  or  that  may  hereafter  be 
established.  The  classifications  of  property  provided  for  in  this  distance 
taritf  are  based  upon  the  "  Western  Classification,"  and  the  rules  gov- 
erning the  same  adopted  and  issued  by  the  Western  Classification  Com- 
mittee, of  which  J.  T.  Ripley  was  Chairman,  and  which  took  etfect 
January  first,  eighteen  hundred  and  ninety-three,  to  which  said  classi- 
fication reference  is  hereby  made;  provided,  however,  that  no  rule  or  rules 
governing  said  Western  Classification  providing  for  any  change,  modifi- 
cations, or  additions  to  the  classifications  mentioned  in  this  distance 
tariff,  shall  have  any  application  hereto. 

[Here  follows  table,  same  as  in  original  Amendment  No.  8.] 

RULES   GOVERNING    SHIPMENT    OF    LIVE    STOCK    BY    THE    CARLOAD. 

Minimum  Weights. — Horses  and  mules,  cattle,  hogs,  and  sheep  shall 
be  way-billed  at  the  following  minimum  weights  per  car,  subject  to 
correction  to  actual  weight  at  destination,  but  in  no  case  less  than  the 
following  minimum  weights: 

[Here  follows  table,  same  as  in  original  Amendment  No.  8,] 

additional  rules. 

1.  Railroads  shall  be  considered  independently  in  computing  dis- 
tances; except,  however,  that  a  system  of  railroads  consisting  of  leased, 
operated,  or  independent  roads  controlled  under  a  common  management, 
although  working  under  different  charters,  shall  be  considered  and 
treated  as  one  road,  and  the  distances  shall  be  computed  over  the  short- 
est operated  line  composed  of  two  or  more  of  said  roads. 

2.  When  any  rate  herein  named  conflicts  with  the  Western  Classifi- 
cation aforesaid,  this  tariff  shall  govern  as  to  such  rate. 

3.  Minimum  Charges. — Single  shipments  of  one  or  more  classes  will 
be  charged  for  at  actual  weight  at  tariif  rates,  subject  to  a  minimum 
charge  of  twenty-five  cents  for  the  entire  consignment,  or  shipment,  for 
a  distance  of  five  hundred  miles  or  less,  and  fifty  cents  for  all  distances- 
over  five  hundred  miles. 


PROCEEDINGS. 


Sacramento,  January  23,  1893. 

Proceedings  before  the  Senate  Committee  on  Constitutional  Amend- 
ments (Senators  Earl,  Chairman;  Carpenter.  Hart,  Seawell,  and  Burke), 
on  Constitutional  Amendment  No.  8,  and  Senator  Gesford's  substitute 
therefor,  providing  for  an  amendment  to  the  Constitution,  fixina-  the 
rates  of  fares  and  freights  to  be  charged  by  railroads  of  the  State  of 
California. 

Senator  Ctesford:  Mr.  Chairman,  and  Gentlemen  of  the  Committee: 
Constitutional  Amendment  No.  8,  which  has  been  printed  and  whi  -h  is 
before  you,  I  will  state  to  the  committee,  was  introduced  by  myself  in 
the  Senate.  Since  its  introduction  a  substitute  has  been  prepared  to 
that  proposed  amendment,  which  I  would  .Uke  to  present  to  tl^e  com- 
mittee and  ask  the  committee  to  propose  it  as  a  substitute  for  Amend- 
ment No.  8 — the  committee  substitute  I  have  here. 

Chairman  Karl:  Does  it  vary  very  materially  from  the  one  printed 
and  under  consideration?  A.  Yes,  sir.  It  varies  in  two  or  three  very 
material  aspects  from  the  one  printed  and  before  you. 

Earl:  If  there  is  no  objection  on  the  part  of  the  members  of  the  com- 
mittee, we  will  consider  the  two  together  to  save  time,  if  you  will  state 
the  material  variations  in  the  one  you  suggest  as  a  substitute. 

Gesford:  There  is  no  variation  with  reference  to  the  repeal  of  the 
provisions  of  the  Constitution  relating  to  the  Railroad  Commission  in 
this  printed  bill  and  the  committee  substitute  that  I  now  propose. 
Sections  1  and  2  of  the  original  bill  provide  for  the  repeal  of  the  Rail- 
road Commission,  or  words  to  that  effect.  Section  3  of  the  proposed 
substitute  provides  for  the  addition  of  Section  36  to  Article  IV  of  the 
Constitution,  reading  as  follows: 

"  Section  36.  The  Legislature  shall  have  the  power,  and  it  shall  be 
its  duty,  to  establish  rates  of  charges  for  the  transportation  of  passen- 
gers and  freight  by  all  railroads  operated  in  this  State,  and  to  enact 
such  laws  as  may  be  necessary  for  the  enforcement  and  carrying  into 
effect  of  such  rates;  provided,  however,  that  the  Legislature  shall  have  no 
power  to  prescribe  rates  of  charges  for  the  transportation  of  passengers 
to  exceed  3  cents  per  mile;  and  provided  further,  that  the  Legislature 
shall  have  no  power  to  prescribe  rates  of  charges  for  the  transportation 
of  freight  to  exceed  the  rates  specified  by  the  '  California  Distance 
Tariff,'  as  in  this  section  hereinafter  set  forth.  Until  the  Legislature  . 
shall  prescribe  such  rates  as  aforesaid,  or  in  the  event  that  any  such 
prescribed  rates  shall  from  any  cause  become  inoperative,  the  rates  of 
charges  for  the  transportation  of  passengers  on  all  railroads  in  this 
State  shall  be  not  to  exceed  2  cents  per  mile,  and  the  rates  of  charges 
for  the  transportation  of  freight  by  any  such  railroads  shall  be  ncit  to 
exceed  the  rates  specified  in  the  following  distance  tarifl',  he:-el)y 
designated  as  the  'California  Distance  Tarifi".'  " 


The  California  Distance  Tariff,  as  embodied  in  this  proposed  commit- 
tee substitute,  is  the  same  as  the  one  in  the  original  proposed  amend- 
ment. I  will  state  to  the  committee  that  Mr.  Godchaux,  in  the 
Assembly,  has  introduced  a  bill  which  is  a  counterpart  of  this  one,  and 
now  proposed  as  a  committee  substitute.  I  think  that  bill  is  printed, 
and  probably  we  had  better  get  some  copies  of  that,  if  your  clerk  will 
do  it.  [The  clerk  was  here  directed  to  procure  some  copies  of  Assem- 
bly Constitutional  Amendment  No.  14,  but  was  unable  to  obtain  them.] 

Gesford:  The  California  Distance  Tariffs,  as  embodied  in  both  of 
these  amendments — the  original  and  the  one  I  now  propose  as  a  substi- 
tute— are  identical,  excepting  the  phraseology  at  the  head  of  each  table 
has  been  changed  somewhat,  making  it  a  little  plainer.  That  is  all. 
There  is  no  material  change  in  the  schedule  at  all.  Then,  in  addition 
to  that,  in  this  proposed  committee  substitute  there  is  embodied  an 
article  providing  for  the  submission  of  the  amendment  to  the  people  for 
ratification,  provided  that  it  shall  be  submitted  on  the  18th  day  of 
April,  1893. 

Earl:  That  is  in  addition  to  what  is  embodied  in  the  original 
amendment?  A.  Yes,  sir.  But  the  only  question  that  arises  in  refer- 
ence to  it  is  whether  or  not  it  can  be  placed  in  the  same  amendment  as 
the  ])rovision  for  submission  to  the  people — whether  that  should  not  be 
done  by  a  separate  Act.  I  think  we  had  better  leave  that  matter  until 
after  discussion  of  the  other  provisions  of  the  amendment. 

Earl:  We  will  be  pleased  to  hear  now,  on  the  point  of  facts  upon 
which  this  proposed  amendment  is  based.  I  understand  it  is  based  on 
substantially  the  same  grounds  as  the  other. 

Gesford:  Mr.  Leeds  is  here,  and  I  think  he  also  represents  the  Traffic 
Association. 

Earl:  Mr.  Leeds,  we  will  be  pleased  to  hear  from  you. 

Mr.  Leeds:  The  first  proviso  of  the  bill  in  reference  is  for  the  amend- 
ment of  the  Constitution  by  the  abrogation  of  Sections  22  and  23  of 
Article  XII,  removing  the  present  Board  of  Railroad  Commissioners, 
and  abolishing  that  portion  of  the  Constitution  which  provides  for 
them.  I  do  not  know  as  it  is  necessary  to  discuss  that  proposition,  as 
I  believe  the  State  is  generally  conceded  to  be  in  favor  of  that  portion 
of  the  proposition.  With  reference  to  the  figures  of  the  tarill",  I  will 
say  that  they  are  made  upon  the  usual  basis,  as  far  as  rating  by 
distances  is  concerned,  as  in  effect  in  other  parts  of  the  country  Avhere  a 
distance  tariff  is  in  use.  I  have  before  me  Wisconsin,  Nebraska,  and 
Kansas,  all  of  which  are  made  up  by  graduations  of  five  miles  for  the 
shorter  distances  and  upwards.  I  have  examined  pretty  carefully  the 
situation  in  California,  and  this  tariff  here  is  based  upon  what,  in  ni}' 
judgment,  would  yield  a  reasonable  revenue  to  the  principal  roads  of 
California.  The  shorter  distances  in  this  tariff'  are  l^T'ed  according  to 
the  present  figures  charged  by  the  roads  in  the  State,  recognizing  no 
distance,  however,  less  than  five  miles;  carrying  the  rate  then,  at  15 
cents  per  ton  per  mile,  for  twenty  miles;  after  that,  basing  it  as  nearly 
as  practicable  on  what  are  the  earnings  to-day  upon  roads  in  Kansas. 
It  differs  somewhat  from  the  distance  tariff  of  roads  in  that  State,  from 
the  fact  that,  after  three  hundred  aJles  is  reached  there,  the  advance, 
after  three  hundred,  four  hundred,  or  five  hundred  miles,  is  greater  than 
it  is  for  a  shorter  distance,  but  the  tariff  would  give,  in  my  judgment,  on 
all  the  tonnage,  about  what  a  like  tonnage  would  vieid  under  the  tariff 


—    3    — 

at  present  in  effect  in  that  State.  As  near  as  I  can  estimate,  the 
reduction  from  the  Southern  Pacific  tariff  in  the  State  of  California  will 
amount  to  from  25  to  30  per  cent.  Considering  the  earnings  of  that 
company — from  what  I  can  determine  they  are  from  their  own  figures — 
within  the  State  of  California,  it  seems  to  me  that  would  not  be  an 
unreasonable  proposition. . 

Q.  Have  you  examined  the  earnings  of  the  San  Francisco  and  North 
Pacific  Railway?  A.  I  have  not  examined  the  earnings  of  any  road  in 
California  but  the  Southern  Pacific  Company;  in  fact,  I  liave  not  the 
data  from  which  to  obtain  the  information. 

Q.  The  data  you  base  this  on,  then,  is  derived  from  the  Southern 
Pacific  Company  alone.  It  is  what  you  estimate  the  cost  of  transpor- 
tation, cost  of  the  road,  etc.?  A.  So  far  as  the  data  is  concerned,  it  is 
what  I  obtained  in  reference  to  the  Southern  Pacific  Company's  busi- 
ness. 

Q.  Mr.  Leeds,  now,  you  said  this  would  yield,  you  thought,  a  fair 
revenue  to  the  roads  affected  by  the  figures,  or  all  the  roads  in  the  State. 
How  do  you  arrive  at  your  calculations?  What  percentages  have  you 
taken  and  what  percentage  would  it  yield  to  the  Southern  Pacific  road? 
What  earning  to  the  Southern  Pacific?  A.  I  say  that  I  believe  it  will 
reduce  their  earnings  on  local  trafiic  25  to  30  per  cent.  Their  local 
trafliic,  according  to  their  own  figures,  amounts  to  something  like  80  per 
cent.  Taking  80  per  cent  as  a  basis,  and  take  30  per  cent  of  that,  the 
reduction  would  be  24  per  cent  of  the  gross  earnings. 

Q.  Have  you  attempted  to  ascertain  what  the  net  revenue  would  be 
to  the  roads  aflected,  the  Southern  Pacific  Company  for  instance?  Have 
you  taken  what  would  be  netted  to  them  by  the  proposed  California 
Distance  Tariff'  under  the  operation  of  this  amendment,  taking  the 
present  tonnage  and  traffic  into  consideration?  A.  I  do  not  know  as  I 
get  the  drift  of  your  question. 

Q.  What  I  say  is  this:  Say  the  existing  rates  of  the  Southern  Pacific 
are  reduced  25  to  30  per  cent,  approximately.  Well,  now,  what  profit 
is  left  them  in  the  operating  of  their  road;  have  you  ascertained  that 
point?  A.  According  to  their  own  figures,  their  operating  expenses  for 
the  Pacific  System  is  59  ])er  cent  of  their  gross  earnings. 

Q.  What  is  meant  by  the  Pacific  System  lines?  A.  The  Pacific  Sys- 
tem of  that  road  comprises  the  lines,  I  believe,  this  side  of  El  Paso, 
Texas,  and  thence  to  Ogden,  Utah,  and  Portland,  Oregon. 

Q.  That  percentage  does  not  include  all  expenses;  that  does  not 
include  bonded  indebtedness — interest  and  bonded  indebtedness?.  A. 
No,  sir. 

Q.  Do  you  know  what  the  interest  account  is  annually — the  inter- 
est charge?  A.  On  the  Pacific  System?  Yes,  sir;  I  have  the  memo- 
randa here,  somewhere,  if  you  will  wait  a  minute. 

Q.  I  would  like  to  have  you  elaborate  on  that  matter  as  much  as  you 
can.  A.  The  interest  on  their  bonded  indebtedness,  as  reported  for  the 
Pacific  System,  is  $8,675,587  42.  I  will  say  for  your  information  that 
the  figures  which  I  have  with  reference  to  the  Southern  Pacific  Com- 
pany are  one  year  old.  This  indebtedness  represents  a  capital,  at  6  per 
cent  interest,  of  $144,593,124. 

Q.  What  do  you  mean  by  capitalization?  A.  The  mortgaged  indebt- 
edness. This  is  on  the  mileage  of  the  Pacific  System,  some  four  thou- 
sand odd  miles.  I  will  give  you  the  mileage  in  a  minute.  It  is  four 
thousand  seven  hundred  and  eleven  miles. 


—    4    — 

Q.  Have  you  figures  there  to  show  the  gross  earnings?  A.  The  gross 
earnings  of  the  Pacific  System  were  $37,010,078  16.  I  separated  from 
that  as  far  as  I  could  the  mileage  outside  of  California,  being  obliged  to 
consider  entire  the  mileage  of  the  Central  Pacific  system,  making  a 
mileage  of  three  thousand  four  hundred  and  ninety-eight  miles  in  the 
State  of  California,  and,  including  the  Central  Pacific  outside  of  Cali- 
fornia. I  find  the  earnings  on  that  would  have  been  $31,555,716  05, 
or  $9,021  07  per  mile  per  annum;  while,  for  the  portion  of  the  system 
outside  of  the  State,  the  amount  was  $4,496  50. 

Q.  Aggregating  about  $6,000,000  of  the  total  of  $37,000,000?  A. 
$5,454,-362  11.  The  gross  earnings  per  mile  on  the  entire  Pacific  Sys- 
tem were  $8,002  and  some  cents. 

Q.  In  your  computations,  did  you  consider  the  interest  on  the  cost  of 
operating  the  road,  in  addition  to  the  cost  of  the  road?  A.  Other  roads 
pay  their  interest  and  fixed  charges  with  a  less  net  earning.  I  have 
some  comparisons,  if  you  please,  with  one  or  two  other  lines.  I  happen 
to  have  the  reports,  and  find  that  the  earnings  of  the  Missouri  Pacific 
system  for  the  same  period  were  $4,965  81  per  mile — a  little  over  one 
half — and  that  they  consumed  70.96  per  cent,  or  nearly  71  per  cent,  of 
their  gross  earnings  in  the  operation  of  the  road.  I  also  find  that  the 
Atchison,  Topeka  and  Santa  Fe  consume  69.19  per  cent  of  their  operating 
expenses,  and  their  gross  earnings  per  mile  are  $5,142  57.  I  also  find 
that,  in  connection  with  the  operation  of  their  road,  they  run  26.12 
miles  to  the  ton  of  coal,  while,  on  the  Southern  Pacific,  in  California,  or 
the  Southern  Pacific  System  lines,  run  29|  miles  to  the  ton.  I  also  find 
that  the  Southern  Pacific  consume,  per  mile  run  for  locomotives,  56 
pounds  of  coal,  while  the  Atchison  consume  108;  that  this  56  pounds 
of  coal  carried  6  tons  per  train  more  than  the  108  tons  of  the  other 
road. 

Q.  What  is  the  cost  of  this  coal?  A.  It  is  set  down  here  for  the 
Southern  Pacific  at  $5  79  per  ton,  and  for  the  Atchison  at  $2  11.  I 
think  there  is  a  difterence  in  the  matter  of  transportation  helping  to 
make  this,  but  I  am  not  sure  about  that.  I  think  there  is.  I  also  find 
that  the  percentage  of  empty  to  loaded  cars  carried  by  the  Southern 
Pacific  Company  was  24.79  per  cent  and  the  Atchison  28.32  per  cent. 
Taking  the  price  of  coal  on  other  roads,  I  find  that  the  Southern  Pacific 
Company's  coal  costs  them  8.9  per  cent  of  their  operating  expenses;  the 
Atchison,  7.8  per  cent,  or  1.1  per  cent  diff'erence.  I  find  that  the  aver- 
age haul  on  through  freight  is  906  miles,  and  the  rate  received  $10  79  a 
ton;  on  local  business  101  miles,  and  the  rate  per  ton  $2  74;  the  aggre- 
gate haul,  206  miles,  and  the  aggregate  receipts  $3  78.  The  rate  per  ton 
per  mile  on  through  was  1.119  cents;  on  local,  2.699  cents — practically 
2.7  cents;  on  all  freight,  1.835  cents;  that  the  local  rate  was  226.6  per 
cent  of  the  through. 

Q.  I  do  not  understand  your  statement.  A.  Two  and  one  fourth 
times  as  much  per  ton  per  miile  as  the  through  traffic  over  the  same 
lines.  The  tons  of  freight  per  train  for  the  Southern  Pacific  were 
,124.63;  on  the  Atchison,  Topeka,  and  Santa  Fe,  118.84 — a  difierence  of 
5.79,  or  6  tons. 

Q.  What  is  the  proportion  of  passengers  per  mile  of  road?  A.  Judg- 
ing from  the  earnings  here,  I  should  say  there  is  more  traffic  per  mile 
of  road  than  there  is  on  the  lines  of  which  I  have  spoken. 

Q.  Than  the  Atchison?     A.  Yes. 


Q.  The  Missouri  Pacific?     A.  I  think  there  is  more. 

Q.  This  table  set  forth  here,  called  a  distance  tariff,  like  the  one  in 
Kansas,  is  based  on  the  Atchison  systen::  you  have  giver  figures  for,  is  it 
not?  A.  It  is  based  on  their  tarift''.  They  make  tarifls  over  there  which 
are  really  less  than  shown  in  the  distance  table.  There  is  a  series  of 
distance  tariffs.  In  fact,  each  State  or  Territory  has,  as  a  general  thing, 
east  of  the  Rocky  Mountains,  a  distance  tariff  which  is  peculiar  to  that 
particular  State.  It  forms  a  basis  for  the  local  tariff  generally,  in  the 
State  or  Territory,  and  differs  somewhat.  There  is  one  in  Illinois,  one 
in  Wisconsin,  Iowa,  Minnesota,  the  Dakotas,  Nebraska,  Kansas;  and,  in 
fact,  as  far  as  my  knowledge  extends,  there  is  a  distance  tariff"  in  effect 
in  each  of  the  States  and  territories. 

Q.  What  basis  would  you  take  to  arrive  at  this  tariff.  Do  you  con- 
sider that  the  carrier  is  entitled  to  interest  on  the  cost  of  carnage — of 
operating  expenses,  and  also  interest  on  the  cost  of  the  road.  Do  you 
take  those  two  elements  into  consideration?  A.  Yes,  and  you  are  pay- 
ing a  good  deal  more  than  that  in  California.  You  are  considering 
rates  which,  as  I  understand  them,  are  within  the  limits  of  California 
alone.  I  am  endeavoring  to  show  by  these  figures  that  the  earnings 
are  Jf^9,020  per  mile  of  road — and,  in  fact,  taking  out  that  portion  of  the 
Central  Pacific  in  Nevada,  you  are  paying  at  least  $10,000  a  mile 
annually  to  the  Southern  Pacific  Company  for  transportation  over 
every  mile  of  road  they  have  in  the  State;  for  operating  expenses,  at 
59  per  cent,  they  would  pay  $5,900,  leaving  at  least  $4,100  to  pay  fixed 
charges  on  the  road  in  this  State. 

Q.  The  total  capitalization  you  state  is  $144,000,000  for  the  Pacific 
System,  so  called.  What  portion  of  this  is  in  California?  A.  I  have 
not  the  material  to  segregate  it. 

Q.  I  understand  this  proposed  amendment  is  put  forth  largely  under 
the  auspices  of  the  Traffic  Association,  in  San  Francisco?     A.  Yes,  sir. 

Q.  V^'e  would  like  a  statement  as  explicit  as  you  are  able  to  give  us 
of  all  the  facts  taken  into  consideration  in  making  up  this  California 
Distance  Tariff — ^just  as  full  as  you  can.  A.  The  operations,  earnings 
per  mile  of  road,  the  comparison  of  operating  expenses,  the  information 
that  California  is  paying  to  this  road  about  twice  or  more  than  twice  as 
much  per  mile  as  is  earned  by  roads  in  other  portions  of  this  country; 
also,  the  proposition  that  it  is  no  more  expensive  here  to  operate  a  road, 
or  should  not  be,  than  in  that  territory,  should  be  quite  sufficient,  it 
strikes  me,  and  demonstrates  the  necessity  for  some  reduction.  It  has 
been  insisted  upon  that  this  system  shall  be  considered  as  a  whole, 
including  Oregon,  Arizona,  New  Mexico,  and  Texas;  but  I  claim,  and 
the  Supreme  Court  of  the  United  States  has  held,  I  believe,  that  in  the 
matter  of  local  commerce,  each  State  is  an  integral  part  "by  itself,  and 
such  State  has  a  power  to  fix  the  rates  on  all  State  business.  Interstate 
■commerce  is  a  subject  over  which  the  States  have  no  jurisdiction;  that 
belongs  exclusively  to  the  Federal  Government.  You  must  not  call 
upon  California  to  support  a  business  in  another  State  or  Territory.  As 
soon  as  the  road  passes  over  the  line  of  your  State,  you  have  nothing 
more  to  say  with  reference  to  the  traffic  which  they  carr\',  and  all 
responsibility  as  to  their  earnings  or  losses,  so  far  as  you  are  concerned, 
ceases.  Whenever  a  system  of  this  kind  is  set  up,  it  seems  to  me 
that  is  contrary  to  the  principles  of  justice  and  equity.     I  will  say  for 


—    6    — 

yonr  information  that  such  claims  were  set  up  in  Kansas  and  Iowa, 
and  they  were  thrust  aside  by  the  Commission,  and  they  were  sustained. 

Q.  By  the  Courts?  A.  No,  sir;  sustained  by  the  people,  and  the  rates 
prescribed  by  the  Commission  were  put  into  effect.  Yes;  I  think  they 
were  sustained  by  the  Courts. 

Q.  They  were?     A.  By  the  Courts. 

Q.  Have  you  the  citations  here?  A.  No,  sir;  I  believe  I  can  get  them, 
though.  They  claim  that  the  operating  expenses  are  higher  here  than 
in  the  East,  owing  to  the  high  price  of  coal.  I  believe  I  have  shown 
that  one  half  the  amount  of  coal  here  provides  the  same  service  as  in 
Kansas. 

Q.  How  can  that  be;  are  not  the  grades  here  heavier?  A.  I  think, 
perhaps,  there  is  not  more  than  10  per  cent  of  the  local  traffic  of  this 
State  that  moves  over  the  heavy  grades.  Furthermore,  the  equeable 
climate  here,  I  should  say,  would  enable  the  performance  of  more  service 
with  a  ton  of  coal  than  in  the  colder  countries  East.  In  the  warm 
weather  here  an  engine  should  do  nearly  double  the  service  that  it 
would  East  over  the  same  kind  of  track.  In  fact,  that  seems  to  be  borne 
out  by  the  fact  that  only  about  one  half  the  amount  of  coal  is  used  here 
for  the  movement  of  a  train  of  5.79  more  tons  than  in  that  territory. 
There  is  another  fact  that  is  worthy  of  consideration.  You  have  very 
little  stone  ballast  here  in  your  roads,  and  very  little  is  required.  Your 
soil  is  better  adapted  to  making  a  roadway,  I  should  think,  than  that 
East,  and  besides  there  are  nine  months  you  have  no  elements  to  con- 
tend against,  and  in  the  other  three  there  is  very  little  storm  and  inter- 
ruption. Where  they  are  obliged  to  have  stone  ballast  in  the  road  it 
requires  the  service  of  a  section  man,  I  believe,  per  day,  to  take  out  and 
put  in  three  ties  in  a  rock-ballasted  road.  Besides,  you  have  here  a  tie 
that  lasts  two  or  three  times  as  long  as  ties  east  of  the  Rocky  Mount- 
ains, and  less  ties  are  to  be  taken  out  and  put  in.  When  your  ties  are 
worn  out  for  track  purposes  it  makes  a  good  fence  post,  while  over  there 
when  worn  out  in  the  trade  it  is  rotten  and  gone. 

Q.  Some  of  the  committee  would  like  to  hear  further  from  you  on 
this  subject;  whether  the  California  Distance  Tariff  here  will  pay  the 
operating  expenses,  say  for  the  Southern  Pacific  road,  and  interest  on 
bonded  indebtedness,  and  leave  a  reasonable  profit  for  the  operation  of 
the  line.  Are  you  able  to  give  us  an  answer  to  that?  A.  I  think  it 
would  be  a  pretty  good  plan,  perhaps,  to  determine  what  the  fixed 
charges  are;  w'hether  the  bonds  are  not  largely  in  excess  of  any  orig- 
inal cost  of  the  property;  whether  the  capital  stock  of  the  road  cost 
anything  or  not;  whether  or  not  you  are  being  called  upon  to-day  to 
pay  a  large  amount  of  money  on  something  that  never  had  any  tangible 
existence.  jVly  calculations  are  based  upon  a  comparison  of  what  has 
been  done,  and  found  more  than  sufficient,  in  other  and  less  favored 
portions  of  the  country,  to  accomplish  the  same  thing.  I  do  not  admit 
that  the  cost  of  operation  in  the  State  of  California  will  be  59  i^er  cent. 
In  fact,  1  have  a  little  comparison  here  which  may  shed  some  light  on 
that  subject,  which  I  have  overlooked.  I  will  mention  it.  The  South- 
ern Pacific  Railroad  of  California  earns  in  gross  $9,279,822  50,  or 
•1-'6,611  54  per  mile,  and  the  operating  expenses  were  58.50  per  cent. 
The  South  Pacific  Coast  earned  $1,107,772  87,  or  $10,651  OG  per  mile, 
and  64.46  per  cent  for  operating  expenses.  This  was  probably  to 
largely  rebuild  the  road  during   that   time,  which    should  have   been 


obviated  by  building  it  properly  in  tbe  first  place.  The  California 
Pacific  earned  $1,528,047,  or  $13,242  79  a  mile,  and  the  operuting 
expenses  were  50.31  per  cent.  This  road  runs  from  Vallejo  to  Sacra- 
mento. 

Q.  That  was  during  the  year  1891?     A.  Yes,  sir. 

Q.  Then  the  interest  and  bonded  indebtedness  is  not  included  in  the 
operating  expenses,  j\Ir.  Leeds?     A.  No,  sir. 

Q.  Do  you  know  whether  or  not  the  bonds  passed  into  the  hands  of 
interested  parties?  Do  you  know  anything  about  the  disposal  of  those 
bonds?     A.  No,  sir. 

Q.  Do  you  know  what  the  roads  are  bonded  for  in  California?  A. 
No;  but  it  would  not  take  a  great  while  to  find  it  out. 

Q.  Your  suggestion  is,  that  the  bonded  indebtedness  of  tliis  road  is 
very  much  in  excess  of  the  cost  of  construction?  A.  Yes,  sir;  I  believe 
it  is. 

Q.  What  would  be  the  effect,  Mr.  Leeds,  if  you  could  answer,  of  the 
adoption  of  this  statutory  amendment  upon  the  independent  lines  of 
road  in  this  State,  other  than  the  Southern  Pacific?  A.  I  think  some 
of  those  roads  are  earning  to-day  $6,000  and  more  per  mile,  and  they 
should  stand  it  as  well  as  the  other  road  can.  I  believe  they  could  stand 
it,  and  believe  the  tariff  would  be  its  own  compensation;  believe  it 
would  operate  to  increase  the  business. 

Q.  Do  you  think  that  the  independent  lines  of  road  you  refer  to  would 
be  able  to  operate  at  a  profit — at  a  reasonable,  fair  profit?  A.  As  far  as 
my  experience  has  extended  in  the  application  of  uniform  tarills  in 
other  portions  of  our  country,  the  roads  have  continued  to  o])erate. 
They  do  not  all  operate  at  a  profit  in  any  State.  People  make  bad  in- 
vestments in  railroads  as  well  as  other  things.  I  do  not  think  there  is 
a  State  in  the  Union  where  every  road  operates  at  a  profit. 

Q.  As  a  general  proposition,  rates  fixed  by  the  State  must  be  reason- 
able with  reference  to  the  cost  of  construction  and  the  cost  of  operating 
the  road;  such  a  rate  as  would  yield  over  operating  expenses,  etc.,  a 
reasonable  interest  on  the  cost  of  construction?  A.  Asa  general  propo- 
sition, I  believe  they  should  make  a  profit  over  operating  expenses  and 
interest  on  bonds. 

Q.  We  understand  you  to  say  that  you  do  not  know  the  cost  of  these 
roads  in  the  State  of  California?  A.  No;  but  I  have  seen  some  estimates 
made  by  competent  engineers  with  reference  to  the  building  of  roads  in 
California. 

Q.  At  the  time  these  were  built?  A.  No,  sir;  at  the  present  time. 
On  the  basis  of  present  prices  for  material  and  labor — the  expense  of 
reproducing  these  roads  at  the  present  time. 

Q.  You  have  no  idea  what  the  original  investment  was?  A.  I  know 
nothing  of  that. 

Q.  We  understand  you  to  say  that  you  made  estimates  from  which 
you  come  to  the  conclusion  that  the  Southern  Pacific  had  been  bonded 
for  about  all  of  its  original  cost?  A.  The  estimates  are  for  the  construc- 
tion of  a  road  at  the  present  time.  For  what  they  could  be  reproduced 
at  the  present  time. 

Q.  Do  you  know  how  many  roads  there  are,  independently  of  the 
Southern  Pacific,  in  this  State?  A.  I  do  not  know  as  I  do;  I  do  not 
believe  I  could  recall  them,  although  I  have  seen  the  names. 

Earl:  At  this  rate  of  2  cents  a  mile  for  passengers,  prescribed  in  this 


proposed  amendment — 2  cents  a  mile,  I  understand,  until  the  Legis- 
lature should  act,  when  3  cents  is  the  maximum.  Is  that  a  reasonable 
rate? 

Leeds:  Until  the  Legislature  acts,  the  passenger  rates  shall  be  2  cents; 
the  maximum  fixed  by  the  Legislature  is  3  cents. 

Q.  How  did  you  arrive  at  that  figure?  A.  That  figure  is  more  of  a 
proviso  than  anything  else;  to  induce  the  making  of  a  rate  on  passenger 
business  by  the  Legislature. 

Q.  You  say  that  is  a  just  and  reasonable  rate  for  the  carriage  of  pas- 
sengers?    A.  It  is  a  lower  rate  than  is  made  on  some  other  roads  in  the 
country  and  in  other  territories.     The  usual  rate  is  3  cents  a  mile;  that 
is  the  usual  rate. 
•    Q.  That  is  the  usual  rate,  say  on  the  Atchison  road?     A.  Yes,  sir. 

Q.  And  on  the  Missouri  Pacific?     A.  Yes,  sir. 

Q.  Is  that  the  general  rate,  3  cents?  A.  Yes  sir;  2  and  3  cents  are  the 
pretty  general  rates  in  the  East.  There  are  more  places  where  the  rate 
is  3  cents  than  any  other.     The  almost  universal  rate  is  3  cents. 

Q.  Three  cents  is  the  almost  universal  rate?     A.  Yes,  sir. 

Q.  Then,  you  mean  to  say  that  2  cents  is  a  just  and  reasonable  rate 
for  the  carriage  of  passengers  in  this  State,  from  your  investigations? 
Is  that  so?     A.  I  told  you  what  my  investigation  was. 

Leeds:  Counting  the  entire  business  of  the  Southern  Pacific  Com- 
pany, I  find  they  report  their  passenger  business  as  being  done  at  2.16 
per  mile;  segregating  their  ferry  and  suburban  business  and  through 
business,  I  find  2.73,  or  say  2|  cents  per  mile.  Taking  the  business, 
excluding  suburban  and  ferry  business,  it  is  2.499  cents.  The  Atchison, 
Topeka,  and  Santa  Fe  business,  covering  the  same  class,  would  be  2.388, 
or  .111  cents  less.  I  do  not  know  as  I  care  very  much  Avhat  the  passen- 
ger rate  is.  It  amounts  to  very  little  of  the  burden,  anyhow,  whether 
it  is  2  or  3  cents.  Three  cents  is  enough,  and  may  be  too  little;  I  don't 
know. 

Earl:  What  do  you  mean  by  saying  that  the  passenger  rates  is 
very  little  of  the  burden?  A.  It  only  amounts,  outside  of  the  suburban 
business,  to  less  than  30  per  cent  of  the  gross  earnings. 

Q.  Not  one  third  of  the  profit — that  is,  you  mean  suburban  and  other 
business  excepted.  How  much  would  that  amount  to?  A.  Something 
like  a  third;  whatever  rates  are  made  would  not  disturb  them,  because 
they  carry  their  ferry  and  suburban  business  at  about  1  cent  per 
mile.  This  amounted  in  1891,  as  near  as  I  can  figure  it,  to  $1,121,754  25; 
they  carried  11,845,443  suburban  and  ferry  passengers;  the  average 
distance  was  9.6  miles,  about.  The  average  rate  per  passenger,  9.47 
cents.  The  intention  of  reducing  the  passenger  rates  is  to  increase  the 
business. 

Q.  The  bill  provides  here  that  a  rate  of  2  cents  shall  be  imposed  until 
the  Legislature  shall  make  a  higher  rate,  and  whenever  the  Legislature 
has  made  a  rate,  which  from  any  cause  becomes  inoperative,  3  cents  per 
mile  will  apply.  According  to  the  statement,  Mr.  Leeds,  the  rate  of 
2  cents  per  mile  seems  to  be  at  least  16  per  cent  less  than  the  average 
rate  now  charged?  A.  The  proviso  to  make  that  3  cents  per  mile  was 
put  in,  perhaps,  on  account  of  some  doubt,  and  it  might  be  found  reason- 
able to  make  that  rate — to  advance  the  rate  to  3  cents. 

Q.  You  think  that  the  rates  fixed  in  this  proposed  amendment  here 
will  encourage,  or  do  you  think  it  will  discourage  the  building  of  roads, 


—    9    — 

that  is,  competing  roads?  A.  I  don't  believe  it  would  discourage  the 
building  of  competing  lines  in  this  State.  That  has  not  been  the  his- 
tory of  other  States  where  such  legislation  has  taken  place.  The  best 
equipped  States  of  the  country  to-day  are  those  where  the  largest 
amount  of  mileage  has  been  added  in  the  last  two  or  three  years,  or  in 
years  during  which  the  legislation  took  place.  Take  for  example  the 
States  of  Illinois,  Wisconsin,  Minnesota,  Iowa,  Nebraska,  and  Kansas. 
In  all  of  those  States  there  has  been  what  railroads  term  "adverse 
legislation."  They  are  all  of  them  to-day  pretty  well  equipped  with 
railroad  facilities. 

Q.  Do  you  know  whether  these  roads  are  operated  with  a  profit  or 
not?     A.  Many  of  them  are,  3'es. 

Q.  This  California  Distance  Tariff,  "  Western  Classification." 

[The  Chairman  then  read  from  the  proposed  amendment,  wherein  it  is 
stated  that  the  distance  tariff  apjilies  to  all  roads  built  now  or  to  be 
built  hereafter  in  the  State  of  California;  shall  be  sul)iect  to  the  "  West- 
■ern  Classification"  and  the  "rates"  governing  the  same.] 

Leeds  (interposing):  It  should  read  "rules"  instead  of  "  rates." 

[Chairman  instructed  Senator  Gesford  accordin|ly.] 

The  Chairman  (continuing):  The  "Western  Classification,"  issued 
January  1,  1893,  said  classification  being  made  part  of  this  distance 
tariff,  and  to  all  intents  and  purposes  as  if  same  were  actually  incor- 
porated herein.  What  is  that  Western  Classification,  Mr.  Leeds?  A. 
The  "Western  Classification"  is  a  classification  of  goods  for  shipment 
which  is  in  effect  in  all  territory  east  of  California  and  west  of  Chicago 
and  the  Mississippi  River. 

Q.  Is  it  in  effect  in  any  portion  of  the  State  of  Nevada?  A.  I  believe 
it  is.  I  know  it  is  in  effect  with  reference  to  interchange  of  business  with 
connecting  lines;  with  reference  to  local  traffic  between  points  in  that 
State,  I  am  not  positive.  It  is  also  in  effect  in  Southern  California.  I 
don't  know  where  the  dividing  point  is,  but  I  think  it  is  at  Mojave.  It 
is  also  in  effect  in  this  part  of  California,  and  business  which  is  con- 
signed through  to  a  point  beyond  what  is  known  as  the  terminal,  when 
coming  from  points  east  of  the  connecting  points  with  a  connecting 
line.  I  don't  know^  exactly  the  definition  put  on  the  tariff",  but  I  believe 
that  is  the  application  of  it;  anyway,  it  is  interchange  business,  and 
applies  on  shipments  which  might  come  to  Sacramento,  and  then  going 
to  outlying  points. 

Q.  What  is  this  "committee;"  who  are  they,  and  how  are  they  made 
up?  A.  That  committee  is  composed  of  representatives  of  each  road 
named  under  the  classification;  they  are  seventy-four  in  number. 

Q.  Is  the  Southern  Pacific  one?  A.  The  Southern  Pacific  is  one- 
They  got  two  members  on  the  committee  for  their  Atlantic  System  and 
the  Pacific  System. 

Q.  How  many  are  there  in  the  committee?  A.  The  Southern  Pacific 
count  two  in  the  committee,  but  there  are  seventy-four  mem])ers  on  the 
committee.  Their  business  is  largely  done  by  the  sub-committee,  which 
meets  one  or  two  days  before  the  full  committee  come  together,  and  passes 
on  many  articles  which  come  up  for  consideration,  and  its  recom- 
mendations are  acted  upon  by  the  full  committee. 

Q.  How  many  are  there  in  the  sub-committee?  A.  I  don't  know- 
to-day  how  many.  There  used  to  be  seven,  I  believe.  I  was  a  member 
at  one  time. 


—  10  — 

Q.  This  classification,  is  it  in  book  form;  is  it  published?     A.  Yes,  sir. 

[The  Chairman,  on  inquiring  for  a  copy,  was  informed  by  Mr.  Gesford 
and  also  by  Mr.  Leeds  that  a  copy  had  been  submitted,  and  they  would 
furnish  others.] 

Q.  Are  the  rules  governing  the  same  in  this  book?  A.  Yes;  it  is 
complete  in  itself. 

Q.  In  a  general  way,  Mr.  Leeds,  is  it  a  classification  of  all  commodities 
shipped — all  commodities  of  trade?  A.  Yes,  sir;  it  is  a  very  full  classi- 
fication. It  has  been  the  work  of  ten  years  in  preparation.  The  com- 
mittee first  organized  in  18S3,  and  it  has  been  revised  and  added  to  and 
carefully  compiled — I  should  say  by  as  good  talent  as  there  is  in  the 
country  anywhere — and  after  very  full  consideration  of  most  of  the 
■*items  of  the  classification  as  between  the  members  of  the  committee 
and  the  shipping  public. 

Q.  Now,  are  these  classifications  rigid  or  are  they  fixed.  Suppose 
some  new  commodity  comes  in  the  market — something  new,  unlisted 
in  the  classification?  A.  That  would  naturally  come  up  at  the  next 
meeting  of  the  Classification  Committee,  and  in  the  meantime  would  be 
passed  upon  by  the  Chairman  of  the  Classification  Committee. 

Q.  And  would  he  list  it?  A.  He  would  send  out  notices,  I  believe, 
with  his  ruling'on  it,  whatever  it  might  be. 

Q.  Does  he  exercise  this  power  in  the  rules  referred  to,  the  rules  regu- 
lating and  governing  the  Western  Classification?  A.  There  is  a  rule 
which  gives  him  that  authority;  yes,  sir. 

Q.  Then  the  classifications  contained  in  this  Western  Classification 
would  not  be  a  fixed  and  rigid  thing,  but  would  change,  possibly?  A. 
Quite  likely. 

Q.  Taking  new  commodities  that  arise?  A.  (Interrupting.)  You  can't 
provide  the  new  commodities  in  advance  in  any  event. 

Q.  That  is  exactly  what  I  thought.  You  can't  provide  in  advance 
for  them,  and  if  they  should  come  into  existence,  the  Western  Classifi- 
cation as  it  exists  to-day,  or  when  it  went  into  efiect,  January  1,  1893, 
would  not  determine  what  class  it  would  go  in,  but  it  would  be  classified 
by  the  committee  that  might  sit  at  the  next  session,  and  in  the  mean- 
time the  Chairman  might  make  a  ruling,  you  say,  classifying  it?  A. 
Yes,  sir. 

Q.  That  would  be  changing  the  classification?  A.  Oh,  no;  the  classi- 
fication is  specific  within  itself  to-day. 

Q.  But  take  a  new  commodity,  something  like  telephones,  or  some 
new  things  introduced,  some  new  matter,  how  would  they  be  listed,  say 
in  the  Western  Classification,  so  called?  A.  They  would  naturally  be 
listed  as  they  would  be  if  no  such  proviso  that  we  were  talking  here 
about  were  in  existence. 

Q.  Do  I  understand  you  to  say  by  that,  that  we  do  not  adopt  the 
rules  of  the  Western  Classification?  A.  You  may  adopt  that  rule,  as 
far  as  I  can  see,  and  yet  be  consistent. 

Q.  But  if  the  Chairman  was  to  rule  on  this  new  commodity,  or  com- 
modities, my  point  is  this:  If  he  were  to  rule,  or  make  a  rule  as  he  is 
empowered  under  this  Western  Classification  here,  he  would  be  doing 
something  that  is  now  new  in  this  Western  Classification,  which  is  com- 
plete in  itself.  Suppose  this  amendment  was  adopted  and  inserted  in 
the  Constitution,  that  would  be  a  final  and  complete  classification,  and 
the  Constitution  would  have  to  be  changed  whenever  the  Chairman 


—  11  — 

made  a  ruling,  as  he  is  empowered  to  do  from  time  to  time?  A.  Drop 
that  rule.  Then  you  want  to  know  what  you  would  do  if  you  were 
making  a  tariff  to-day,  making  a  constitutional  proviso.  I  only  answer 
the  question  by  asking  another  one,  to  .show  you  that  you  can't  provide 
for  something  that  don't  exist  to-day. 

Q.  But  it  is  attempted  here.  Is  it  not  the  thouglit  of  the  drafter  of 
this  that  rulings  of  the  Chairman  of  the  Western  Classilication  Com- 
mittee, for  instance,  and  his  committee  should  be  a  part  of  our  Consti- 
tution from  time  to  time?  A.  You  provide  there  that  you  shall  do  with 
this  committee  precisely  what  he  will  do  with  it  anyhow,  and  precisely 
what  the  parties  affected  by  tliis  tariff  would  do  if  that  rule  were 
entirely  left  out  from  this  constitutional  proviso. 

Q.  If  this  rule,  that  we  have  been  speaking  about,  becomes  part  of 
our  Constitution,  was  adopted  April  18th,  as  I  understand  it  here;  if 
the  proposition  was  adopted,  then  the  Constitution  would  be  changed 
from  time  to  time  as  these  rules?  A.  No,  because  it  is  not  part  of  the 
Constitution.  That  which  he  does  afterward  is  not  a  part  of  the  Con- 
stitution— would  not  be  a  part  of  any  Constitution. 

Q.  How  would  the  new  commodities  be  classified?  Supposing  one 
came  into  existence,  how  would  they  be  classified  by  this  particular 
classification  covering,  say  three  thousand  commodities?  There  is  a 
development,  and  in  the  course  of  time  new  commodities  spring  into 
existence.  How  are  they  to  be  classified?  Who  would  classify  them? 
Suppose  you  adopt  a  tariff  and  classification.  You  do  it  as  a  specific 
proposition?  Well,  how  would  you  classify  the  new  commodities?  A. 
Why,  classify  as  you  do  with  the  others,  as  they  come  up.  It  need  not 
be  a  part  of  your  Constitution,  so  far  as  I  can  see. 

Q.  This  Western  Classification  would  be  a  part  and  portion  of  our 
Constitution,  fixed  and  rigid.  A.  Does  it  become  a  part  of  the  Consti- 
tution ? 

Q.  Yes,  sir.     A.  It  becomes  a  part  of  the  tariff. 

Q.  The  tariff"  becomes  part  of  the  Constitution,  because  it  is  all  set 
forth;  and  we  are  all  impressed  here  that  this  classification,  being  made 
part  of  this  distance  tariff,  as  if  the  same  were  actually  incorporated  in 
it,  is  a  part  of  the  amendment,  as  proposed.  A.  I  am  not  a  constitu- 
tional lawyer,  but  I  should  say  that  you  can  refer  to  that  tariff,  or  that 
classification  in  the  tariff,  as  you  might  refer  to  Webster's  dictionary,  or 
any  other  standard  publication,  and  yet  not  make  it  a  part  of  the 
Constitution. 

[The  Chairman  then  read  portions  of  the  proposed  amendment,  wherein 
it  was  stated  that  the  distance  tariff"  and  classification,  as  he  understood 
it,  was  to  be  made  part  of  said  amendment.] 

[Mr.  Leeds,  however,  could  not  agree  with  him  on  this  point.] 

Earl:  I  understood  the  table  set  forth,  together  with  all  the  figures, 
became  a  part  of  our  organic  law,  together  with  the  Western  Classification. 

Leeds:  That  is  not  my  theory.  It  is  a  specific  publication,  readily  re- 
ferred to  and  understood,  and  it  is  not  necessary  it  should  become  i)art  of 
the  Constitution  any  more  than  any  other  publication  referred  to  should 
become  a  part  of  it. 

Earl:  It  is  not  only  my  impression,  but  the  impression  of  every  mem- 
ber of  the  committee,  that  the  classification,  together  with  the  rules  and 
also  the  tariff  and  tables  set  forth  herein,  were  to  become  part  of  our 
Constitution,  to  all  intents  and  purposes. 


—  12  — 

Leeds:  They  were  put  in  for  the  purpose  of  saving  time.  It  is  not 
my  idea  that  they  were  to  become  a  part  of  the  Constitution. 

Earl:  What  is  your  idea  as  to  how  much  should  be  inserted  as  apart 
of  the  Constitution? 

Leeds:  Only  the  table  of  figures  in  reference  to  the  classification. 
The  classification  is  a  publication,  easily  set  forth  and  referred  to,  as 
any  standard  publication. 

[In  conferring  with  the  other  members  of  the  committee,  their  impres- 
sion was  the  same  as  that  of  the  Chairman  (Mr.  Earl),  viz.:  That  the 
classification  would  become  part  of  the  amendment  to  the  Constitution; 
and,  instead  of  being  the  rigid  and  fixed  thing,  would  shift  from  time 
to  time,  according  to  the  rules  laid  down  by  the  Chairman.] 

Gesford:  The  words  "  after  January  1,  1893,"  should  be  stricken 
out,  and  also  an  exception  made  as  to  the  rules  giving  the  Chairman 
power  to  classify  new  commodities. 

Earl:  Under  those  rules  of  the  classification,  does  the  Chairman, 
Mr.  Leeds,  of  that  committee  have  the  right  to  reclassify  articles  in 
there  already?  A.  No,  sir;  not  to  make  changes  without  the  vote  of 
all  the  members  of  the  committee.  As  I  understand  it,  they  meet  about 
once  a  year. 

Q.  Why  are  these  powers  given  to  the  committee,  to  reclassify  articles 
from  time  to  time  in  case  of  emergency,  or  as  the  trade  demands?  A. 
There  have  been  such  things  recognized  in  connection  with  the  classifi- 
cation, and  many  changes  have  been  made.  There  was  an  eflbrt  made 
some  three  years  ago  to  make  a  uniform  classification  of  the  United 
States,  but  it  fell  through.  It  was  impossible  to  reconcile  the  dill'er- 
ences  between  the  trunk  lines  east  of  Chicago  and  the  Mississippi  River, 
and  the  lines  west  thereof.  But  there  was  a  disposition,  however,  to 
make  as  many  articles  as  were  consistent,  uniform  with  the  trunk  line, 
or  what  is  known  as  the  "  Official  Classification,"  and  thereby  facilitate 
the  interchange  of  business  between  the  roads  which  use  the  two  classifi- 
cations, "  Official "  and  "  Western."  Uniformity  is  a  very  desirable  thing 
to  have  in  the  interchange  of  traffic  between  roads,  and  in  that  way 
there  was  some  last  year.  I  think  in  1891  a  good  many  changes  were 
made.  Very  frequently  the  trades  people  come  before  this  committee 
with  propositions  to  be  made  in  classification,  to  assist  in  furthering 
their  interests  on  certain  articles,  when  it  is  determined,  if  desirable  to 
do  so,  to  make  the  change. 

Q.  Then  your  idea  is  that  the  same  necessity  would  apply  on  the  lines 
here  in  California,  would  it  not?     A.  Yes,  sir. 

Earl:  I  think  the  classification  would  become  part  of  our  Constitu- 
tion. Now,  suppose  it  is  necessary  to  the  demands  of  trade  that  these 
matters  which  are  controlled  under  the  Western  Classification  come  into 
play  here,  and  this  amendment  were  adopted.  There  being  no  com- 
mittee, would  not  the  vote  of  the  people  of  the  State  of  California  U])on 
their  proposed  amendment  be  necessary  to  make  the  change  in  the 
classification?  In  other  words,  the  only  way  I  can  see  is  for  the  adop- 
tion of  the  resolution  to  pass  both  houses  of  the  Legislature  by  a  two- 
thirds  vote,  and  the  submission  of  the  proposition  to  the  people,  when,  if 
it  receives  a  majority  vote,  the  proposition  is  accepted  and  becomes  part 
of  our  organic  law;  while  according  tr>  the  scheme  modified  by  yourself 
and  Senator  Gesford,  the  scheme  would  become  a  fixed  and  rigid  one. 
The  power  of  a  classification  committee  and  the  Chairman  thereof  to 


-«-  13  — 

classify  articles  as  they  are  now  or  may  be  to-day  under  the  rules  gov- 
erning this  committee  would  be  eliminated  from  this  constitutional 
amendment  here.  The  constitutional  amendment  would  be  fixed  and 
rigid,  and  the  classification  would  never  be  changed  or  modified.  There- 
would  be  no  power  to  change  it  as  the  demands  of  trade  would  reciuire. 
There  would  be  no  power  excepting  the  LegisUiture  and  submission  to- 
the  people. 

Leeds:  Tlie  first  paragraph  of  Section  36,  making  it,  the  duty  of 
the  Legislature  at  the  first  regular  session  after  the  adoption  of'  the 
amendment  to  prescribe  rates  of  fares  for  passengers,  and  provide  classi- 
fication of  propertv,  and  to  fix  and  determine  the  rates  of  freight  that 
were  charged  on  all  railroads  in  the  State  of  California,  covers  the 
point. 

Earl:  I  do  not  think  it  is  just  or  fair  to  have  to  wait  the  convening 
of  the  Legislature  before  the  classification  could  be  changed,  in  order  to. 
meet  the  exigencies  of  trade  and  commerce. 

Leeds:  It  will  be  a  vast  improvement  on  what  we  have  at  pres- 
ent if  we  only  had  the  classification  changed  once  in  two  years.  I  do. 
not  think  the  classification  has  been  changed  in  ten  years;  that  rates 
and  fares  could  not  very  well  be  provided  without  a  governing  classifi- 
cation, which  need  not  necessarily  be  the  Western  Classification.  It  is 
not  the  intention  of  the  bill,  so  far  as  my  idea  is  concerned,  \>o  make  the 
classification  part  of  the  Constitution. 

Carpenter:  I  see  very  little  use  sitting  here  with  a  bill  that  can 
only  be  read  by  one  member  of  the  committee  at  a  time,  and  discussing 
this  question.  I  don't  think  it  is  parliamentary  or  right  to  send  the 
bill  here  in  that  shape.  I  move  this  bill  be  referred  to  the  Assembly,, 
with  the  request  to  have  it  printed  and  recommitted. 

Leeds  (interrupting):  I  don't  think  it  is  necessary  to  waste  time 
about  that.  This  tariff  and  classification  are  only  calculated  to  afford 
relief  in  the  interim,  until  the  Legislature  can  act  upon  that  question. 
There  is  certainly  no  such  idea  connected  with  the  bill  there,  as  to  fix_ 
the  rigid  classification  in  the  Constitution  of  this  State,  or  even  a  rigid 
schedule  of  rates. 

Carpenter:  It  may  be  a  waste  of  time,  according  to  the  idea  of  Mr. 
Leeds.  I  don't  propose  to  go  into  argument  of  the  question  with  Mr. 
Leeds,  or  anybody  else,  and  want  to  know  what  we  are  doing  on  a  ques- 
tion delivered  to  us  in  that  form.  The  Chairman  don't  agree  with  Mr. 
Leeds,  and  it  seems  the  distinguished  Senator  who  introduced  the  bill 
don't  agree  with  him,  and  I  want  a  printed  bill. 

Earl:  Mr.  Gesford  asked  the  indulgence  of  the  committee  for  having 
the  bill  in  this  form,  which  was  granted. 

Carpenter:  Well,  I  insist  that  the  bill  should  be  reported  back  to 
the  Assembly,  to  be  printed  and  recommitted. 

Earl:  The  bill  should  be  printed,  and  will  be  sent  back,  and  the  com- 
mittee will  proceed  with  its  other  business.  I  understand  there  are 
a  number  of  representatives  of  railroads  present,  some  of  whom  were 
anxious  to  get  away  to-night  and  wish  to  be  heard. 

Judge  Martin:  I  would  suggest  that  the  same  difficulty  which  has 
confronted  the  committee  as  to  a  proper  understanding  of  the  amend- 
ment would  confront  the  gentlemen  representing  the  railroads  also,  and 
therefore  if  we  could  have  this  reported  back,  the  gentlemen  represent- 
ing the  railroads  would  take  this  subject  up  with  the  committee  at  some 


—  14  -i- 

future  time.  The  matter  is  one  of  vast  importance  to  the  railroads,  and 
I  do  not  see  how  any  gentleman  could  properly  understand  the  details 
proposed  in  the  amendments  until  we  get  copies  of  it.  It  would  only 
be  a  waste  of  time  to  consider  it  further  at  present. 

[Some  of  the  gentlemen  present  had  to  go  away  immediately,  and  it 
was  understood  the  bill  would  not  be  reported  back  before  at  least 
Wednesdny.] 

Earl:  The  meeting  will  stand  adjourned  to  Wednesday  evening,  at 
7:30  o'clock. 

January  25,  1893. 

Meeting  called  to  order  at  7:30  p.  m. 

Mr.  Earl:  All  the  committee  are  present  except  Senator  Carpenter. 
The  matter  that  the  committee  will  take  up  and  consider  this  evening 
will  be  the  Committee  Substitute  for  Senate  Constitutional  Amendment 
No.  8,  so  entitled;  the  same  proposition  that  was  being  considered  last 
Monday  evening.  The  oral  amendments  are  now  incorporated  in  this 
printed  resoluiion.     We  will  be  glad  to  hear  from  Senator  Gesford. 

Senator  Geskord:  Mr.  Chairman  and  Gentlemen  of  the  Committee — 
You  have  before  you  the  proposed  Committee  Substitute  for  Senate 
Constitutional  Amendment  No.  8,  which  embodies  the  one  that  I  pro- 
posed at  the  last  sitting  of  the  committee,  together  with  some  amend- 
ments that  were  suggested  at  that  time,  and  one  or  two  additional.  You 
will  notice  that  the  resolution,  after  providing  for  the  repeal  of  Section 
22  of  Article  XII  of  the  Constitution,  provides  for  an  additional  sec- 
tion, 36,  to  Article  IV,  and  that  I  may  be  understood  in  what  little  I 
have  to  say,  I  will  read  the  section: 

"  The  Legislature  shall  have  the  power,  and  it  shall  be  its  duty,  to 
establish  rates  of  charges  for  the  transportation  of  ])assengersand  freight 
by  all  railroads  operated  in  this  State,  and  to  enact  such  laws  as  may 
be  necessary  for  the  enforcement  and  carrying  into  effect  of  such  rates." 

As  to  this  clause  in  the  section,  the  committee  will  observe  the  Legis- 
lature have  the  power,  it  is  their  duty,  to  establish  rates  on  all  roads 
in  the  State;  that  is,  the  general  proposition  that,  in  lieu  of  the  Rail- 
road Commission  having  this  power,  in  lieu  of  the  establishment  of 
freights  and  fares  by  a  Railroad  Commission,  that  power  is  given  to  the 
Legislature. 

(Continuing  to  read): 

'^Provided,  hoivever,  that  the  Legislature  shall  have  no  power  to  pre- 
scribe rates  of  charges  for  the  transportation  of  passengers  on  any  rail- 
road, or  system  of  railroads,  whose  gross  annual  earnings  are  more 
than  $4,000  a  mile,  to  exceed  3  cents  per  mile." 

It  was  suggested  at  the  last  sitting  of  the  committee,  and  upon  fur- 
ther investigation  and  more  deliberate  examination,  it  has  been  ascer- 
tained that  there  are  a  number  of  roads  in  this  State,  small  roads,  that 
could  not  be  operated  with  the  same  tariff,  to  net  a  profit,  as  the  larger 
roads;  and  in  order  to  provide  a  clause  it  has  been  thought  advisable  to 
classify  the  roads  into  two  classes:  Those  whose  annual  gross  earnings 
are  less  than  .|4,000  per  mile,  and  those  whose  gross  annual  earnings 
are  more  than  $4,000  per  mile;  so  that,  so  far  as  this  clause  of  the 
amendment  is  concerned,  these  small  roads  will  not  be  burdened,  or 
injured,  or  prejudiced  by  the  rate  that  the  larger  roads  can  operate 
under. 


—  15  — 

(Continuing  to  read): 

^^And  provided  further,  that  the  Legislature  shall  have  no  power  to 
prescribe  the  rates  of  charges  for  the  transportation  of  freight  on  any 
railroad  or  system  of  railroads  whose  gross  annual  earnings  are  more 
than  $4,000  a  mile,  to  exceed  the  rates  specified  in  the  '  California  Dis- 
tance Tariff,'  as  in  this  section  hereinafter  set  forth.  Until  the  Legisla- 
ture shall  prescribe  such  rates  as  aforesaid,  or  in  the  event  that  any  such 
prescribed  rates  shall,  from  any  cause,  become  inoperative,  the  rates  of 
charges  for  the  transportation  of  passengers  on  all  railroads  in  this  State 
whose  gross  annual  earnings  are  more  than  $4,000  a  mile,  shall  be  3  cents 
per  mile,  and  the  charges  for  the  transportation  of  freight  by  any  such 
railroads  shall  be  the  rates  specified  in  the  following  distance  tariff, 
hereby  designated  as  the  '  California  Distance  Tariff','  to  wit." 

The  same  classification  being  made  with  reference  to  freight  schedule 
as  to  passenger.  And  you  will  also  notice  the  2  cent  proposition  has 
been  eliminated.  Upon  further  investigation,  and  after  considering  the 
matter  more  fully  and  carefully,  it  has  been  deemed  advisable  to  incor- 
porate 3  cents  instead  of  2  cents;  the  3  cent  rate  being  an  almost  uni- 
versal rate,  it  being  the  opinion  of  the  gentleman  who  investigated  this 
that  a  3  cent  rate  is  a  fair  and  reasonable  rate. 

(Continuing  to  read): 

"  Until  the  Legislature  shall  prescribe  such  rates  as  aforesaid,  or  in 
the  event  that  any  such  prescribed  rates  shall  from  any  cause  become 
inoperative,  the  rates  of  charges  for  the  transportation  of  passengers  on 
all  railroads  in  this  State  whose  gross  annual  earnings  are  more  than 
$4,000  per  mile,  shall  be  3  cents  per  mile,  and  the  charges  for  transpor- 
tation of  freight  by  any  such  railroads  shall  be  the  rates  specified  in 
the  following  distance  tariff,  hereby  designated  as  the  '  California  Dis- 
tance Tariff.' " 

Now,  gentlemen,  there  is  one  amendment  that  I  desire  to  make  to 
this  bill,  and  to  present  to  the  committee  and  ask  them  if  they  pass 
upon  the  bill  favorably:  That  after  the  word  "  mile  "  on  line  seventeen, 
in  order  to  have  some  fixed  manner  to  determine  what  the  "gross 
earnings"  of  a  railroad  are,  these  words  be  incorporated,  namely:  "As 
shown  by  the  Thirteenth  Annual  Report  of  the  Board  of  Railroad  Com- 
missioners of  the  State  of  California,"  making  that  provision  read  then 
as  follows: 

"Until  the  Legislature  shall  prescribe  such  rates  as  aforesaid,  or  in 
the  event  that  any  such  prescribed  rates  shall  from  any  cause  become 
inoperative,  the  rates  of  charges  for  the  transportation  of  passengers  on 
all  railroads  in  this  State,  whose  gross  annual  earnings  are  more  than 
$4,000  per  mile,  as  show-n  by  the  Thirteenth  Annual  Report  of  the 
Board  of  Railroad  Commissioners,  shall  be  3  cents  per  mile,  and  the 
charges  for  the  transportation  of  freight  by  any  such  railroads  shall  be 
the  rates  specified  in  the  following  distance  tariff,  hereby  designated  as 
the  '  California  Distance  Tariff.'  " 

Now,  the  committee  should  bear  in  mind  this  proposition:  This 
Legislature  can  fix  no  schedule  of  freights  and  fares,  that  power  being 
delegated  alone  to  the  Railroad  Commission,  and  until  the  Railroad 
Commission  is  abolished,  until  those  provisions  of  the  Constitution  are 
abrogated,  the  Legislature  will  have  no  control  over  the  establishment 
of  freights  and  fares,  so  that  this  bill  proposes  now:  First — To  abolish 
the  Railroad  Commission,  to  wipe  it  out,  and  provide,  in  the  interim,  a 


—  16  — 

schedule  of  freights  and  fares;  in  other  words,  if  this  amendment  to 
the  Constitution  should  go  into  effect,  say  on  the  first  day  of  July,  1893^ 
then  from  that  time  until  the  Legislature  shall  have  fixed  a  schedule  of 
freights  and  fares,  the  rates  provided  in  this  amendment  would  govern 
until  that  time;  in  other  words,  it  is  intended  only  as  a  provision  to 
bridge  over  the  interim  between  the  time  the  amendment  shall  have 
gone  into  effect  and  until  the  time  the  Legislature  shall  have  established 
the  rates  of  freights  and  fares. 

(Continuing  to  read): 

"California  Distance  Tariff. — This  distance  tariff  shall  be  applic- 
able to  local  traffic  between  all  stations  in  the  State  of  California  now 
established,  or  that  may  hereafter  be  established.  The  classifications- 
of  property  provided  for  in  this  distance  tariff  are  based  upon  the 
'Western  Classifications'  and  the  rules  governing  the  same  adopted  and 
issued  by  the  Western  Classification  Committee,  of  which  J.  T.  Ripley 
was  Chairman,  and  which  took  effect  January  1,  1893,  to  which  said 
classification  reference  is  hereby  made." 

The  objection  was  made  that  that  classification,  in  the  manner  in 
which  it  was  incorporated  in  the  bill,  would  become  a  variable  classifi- 
cation— that  is,  it  would  be  subject  to  change  by  the  Chairman  of  the 
railroads  composing  that  Classification  Committee,  and  therefore  it 
would  not  be  a  fixed  and  determined  classification.  Now,  the  idea  is- 
not  to  incorporate  that  classification  into  this  amendment,  but  simply 
to  refer  to  it  as  a  basis  upon  which  this  California  Distance  Tariff  i& 
based. 

(Continuing  to  read): 

"  Provided,  however,  that  no  rule  or  rules  governing  such  classification 
providing  for  any  change,  modifications,  or  additions  to  the  classifica- 
tions mentioned  in  this  distance  tariff  shall  have  any  application 
hereto." 

In  other  words,  that  this  Western  Classification  is  fixed,  deter- 
mined, invariable;  and  if  adopted — if  this  distance  tariff  is  adopted  by 
us — I  think  there  will  be  a  provision  of  the  Constitution  sul)ject  to  no- 
change.  Of  course  it  will  be  argued — and  I  do  not  claim  to  be  a  rail- 
road expert;  don't  claim  to  be  an  expert  on  freights  and  fares;  claim  to 
know  very  little  about  them — I  don't  pretend  to  be  an  expert,  as  I  say, 
but  I  have  undertaken  to  assist  in  this  bill  to  the  best  of  my  abilit}',, 
and  I  have  presented  it  here  on  behalf  of  the  Traffic  Association. 
If  there  are  defects  in  it,  it  is  for  this  committee  to  remedy  those 
defects.  I  contend  the  people  are  looking  for  some  relief  in  this  matter. 
I  am  not  one  of  those  so-called  "anti-railroad"  fellows;  I  am  not  one 
of  those  fellows  who  believe  that  in  order  to  gain  notoriety  it  is  neces- 
sary to  burn  railroad  bridges  and  destroy  railroad  property;  I  am  not 
made  out  of  that  kind  of  material.  I  believe  in  a  fair  and  honest 
adjustment  of  this  question.  I  don't  believe  in  this  demagogy.  I 
don't  believe  in  this  howling  about  corporations  and  railroads  for  the 
purpose  of  creating  sentiment  against  any  class  of  people  or  property 
rights.  The  whole  State  of  Cahfornia  expects  the  Legislature  to  do 
something — they  are  looking  to  it  to  do  something.  I  don't  believe  the 
State  of  California  wants  to  confiscate  any  property  or  de])rive  anybody 
of  their  rights.  But  they  simply  want  us  to  do  that  which  is  for  the 
interests  of  all  parties  concerned,  and  therefore  this  bill  is  submitted  by 
me  in  that  spirit,  and  in  that  spirit  alone. 


—  17  — 

Sl-:awell:  Is  there  any  other  Constitution  that  you  knoAv  of  where 
this  maximum  rate  is  embodied  in  the  organic  hiw? 

Gesford:  There  is  no  such  a  provision  in  any  Constitution  that  I  have 
examined.  I  know  of  nothing  of  this  kind  having  been  embodied;  it 
is  an  innovation;  entirely  so.  We  are  in  this  position  in  this  State:  if 
the  people  Avill  vote  for  this  amendment  that  we  propose  to  them,  abol- 
ishing the  Railroad  Commission,  we  leave  the  railroad  companies  from 
the  time  of  ratification  of  that  amendment  until  the  time  the  Legislature 
is  clothed  with  power  to  fix  rates,  to  manage  and  control  rates  of  fares 
and  freights  by  themselves.  This  is  simply  a  temporary  affair.  The 
Legislatures  of  other  States  have  done  it,  and  I  believe  California  can 
do  Avhat  other  States  do,  and  that  we  can  arrive  at  a  proper  and  a  just 
solution  of  this  question  of  freights  and  fares  which  has  troubled  us  so 
long,  and  for  all  the  years  we  have  had  railroads  in  this  State.  This 
distance  tariff,  gentlemen,  denominated  in  this  amendment  as  the 
"California  Distance  Tariff,"  is  based  on  the  Western  Classification,  a 
classification  for  property  made  for  the  purpose  of  fixing  rates  by  repre- 
sentatives of  seventy-four  railroads.  This  classification  is  one  that  has 
been  changed  from  time  to  time,  and  the  one  referred  to  here  is  the  one 
that  went  into  effect  January  1,  1893.  There  are  very  few  changes  on 
staple  articles,  I  imagine,  and  I  believe  that  no  one  would  suffer  by  the 
•adoption  of  the  schedule  of  rates  for  a  short  period,  until  the  next  Leg- 
islature should  have  provided  a  different  system  or  different  rate.  Now 
as  to  the  question  as  to  whether  these  rates  are  equitable  or  not,  Mr. 
Leeds  has  told  3'ou,  and  it  has  not  yet  been  disputed,  that  this  was  a 
reasonable  schedule  of  rates;  it  was  some  twenty-two  per  cent  lower 
than  the  freight  rates  established. 

Leeds  (correcting):  It  was  25  or  30  per  cent  lower  than  the  present 
tariff'  of  the  Southern  Pacific;  that  it  applied  to  probably,  within  the 
limits  of  the  State  of  California,  to  something  like  70  per  cent  of  their 
business;  I  should  judge,  as  near  as  I  can  calculate,  their  through  busi- 
ness, which  would  not  be  disturbed  by  this  tarifi",  and  applying  25  or 
30  per  cent  to  70  per  cent,  would  be  21  or  22  per  cent. 

Gesford:  It  is  a  material  reduction  of  freight  charges  now,  being  a 
matter  of  22,  25,  or  30  per  cent;  it  is  a  material  reduction,  and  a  reduc- 
tion that  the  railroads  can  stand;  that  they  can  operate  at  a  profit 
under,  this  reduction.  Now,  then,  if  these  rates  are  not  equitable  and 
just,  with  the  statement  of  Mr.  Leeds — and  I  believe  it  will  not  be  con- 
tradicted, he  is  well  posted  on  the  subject  of  rates  of  freights — with  this 
proposition  before  us,  if  these  rates  are  not  fair,  it  seems  to  me  it  is  for 
those  who  controvert  the  proposition,  to  show  wherein  it  will  be  ruinous 
or  injurious^  to  the  freight  traffic  of  the  State. 

(Continuing  to  read:) 

"  Rules  governing  shipment  of  live  stock  by  the  carload,"  etc. 

Then  there  are  some  additional  rules  had  to  be  made  for  the  protec- 
tion of  shipments. 

(Continuing  to  read): 

"  Railroads  shall  be  considered  independently  in  computing  distances; 
jxcept,  however,  that  a  system  of  railroads  consisting  of  leased,  oper- 
ited,  or  independent  roads  controlled  under  a  common  management, 
ilthough  working  under  different  charters,  shall  be  considered  and 
seated  as  one  road." 


—  18  — 

So  that  there  would  not  he  two  or  three  different  rates  on  a  system 
of  roads;  the  rates  would  follow  right  along  through  to  the  end  of  the 
system. 

(Continuing  to  read): 

"And  the  distances  shall  be  computed  over  the  shortest  operated 
line  composed  of  two  or  more  of  said  roads.  Whenever  the  rate  herein 
named  conflicts  with  the  Western  Classification  aforesaid,  this  tariff 
shall  govern  as  to  such  rate.  Single  shipments  of  one  or  more  classes 
will  be  charged  for  at  actual  weight  at  tariff  rates,  subject  to  a  mini- 
mum charge  of  25  cents  for  the  entire  consignment  or  shipment  for  a 
distance  of  five  hundred  miles  or  less,  and  50  cents  for  all  distances 
over  five  hundred  miles." 

In  other  words,  the  railroads  will  not  be  compelled  to  charge  any- 
thing less  than  25  cents  for  five  hundred  miles  or  less,  and  50  cents  for 
over  five  hundred  miles.  It  seems  to  me,  gentlemen,  it  is  a  simple 
proposition,  and  the  question  it  seems  to  me  for  this  Constitutional 
Amendment  Committee  to  consider  is,  first,  whether  or  not  this  plan  is 
feasible;  second,  whether  it  is  constitutional.  If  there  is  any  provision 
that  would  prohibit  the  incorporation  of  a  distance  tariff  of  this  kind,  or 
system  of  rates  of  freight  and  fares  of  this  kind,  it  is  a  question  that  it 
seems  to  me  ought  to  be  determined.  I  know  of  nothing,  and  think  the 
peoi-le  of  this  State  have  set  their  minds  on  this  subject,  and  think 
they  would  incorporate  this  in,  so  to  speak,  the  "belly"  of  the  Constitu- 
tion. There  may  be  questions  of  a  serious  nature  that  will  arise  that 
we  have  not  thought  or  provided  for.  There  never  was  a  Constitution 
framed  yet,  or  statute  or  law  made,  but  astute  lawyers  could  find  some 
flaw;  but  I  will  state  to  the  committee  that  I  have  devoted,  off  and  on, 
a  week  or  ten  days  to  the  subject,  new  to  me.  I  have  been  prosecuting 
criminals,  etc.,  and  this  is  about  all  the  railroad  I  have  had  in  mine, 
though  I  expect  I  shall  have  a  good  many  questions  to  answer  before  I 
get  through  with  this  proposition;  but  I  submit  it  to  this  committee, 
and  I  ask  their  kindly  consideration  of  this  bill.  It  seems  to  me  it 
covers  every  phase  of  the  question.  It  seems  to  me  it  is  what  we  want. 
I  don't  see  how  any  one  can  object  to  it,  unless  the  rates  are  ruinous 
and  would  confiscate  the  roads;  but  I  believe  there  are  only  four  or  five 
in  the  State  to  which  they  apply. 

If  that  bill  will  result  in  ruin,  we  want  to  know  it.  Mr.  Leeds  says 
no.  Now,  then,  if  the  railroad  people  say  and  can  demonstrate  that 
these  rates  will  ruin  their  property  and  confiscate  it — so  to  speak,  wipe 
it  off  the  face  of  the  earth — let  us  hear  from  them,  and  if  that  be  the 
case,  I  will  not  vote  for  the  bill  or  resolution,  because  I  do  not -believe 
we  can  get  along  without  the  railroads.  The  only  question  is:  Shall 
the  people  be  the  creatures  of  the  railroad,  or  the  railroads  the  creatures 
of  the  people;  that  is  all  there  is  to  it.  We  have  to  have  railroads,  but 
let  us  control  them,  keep  them  in  proper  bounds;  let  us  make  them  our 
servants  and  not  our  masters.  We  know  they  have  not  been  our  serv- 
ants but  our  masters  in  this  State;  what  we  are  trying  to  do  is  to  put 
them  in  the  niche  where  they  belong.  "  ii 

Earl:  The  committee,  unfortunately,  since  the  adjournment  on  Mon-|  ^ 
day  night,  have  not  had  very  much  tinae  to  examine  into  this  matter. 
The  committee,  I  will  state,  of  course  is  in  no  way  informed  on  the 
important  matters  that  are  involved  in  this  amendment,  and  Ave  desire  to 
say  to  Senator  Gesford,  and  to  all  here  that  are  interested  in  this  matter, 


li 


—  19  — 

that  we  wish  to  investigate  it  very  carefully,  and  fairly,  and  sincerely, 
simply  for  the  truth:  and  I  speak,  I  think,  for  all  the  committee— cer- 
tainly do  for  myself— and  any  of  our  inquiries  that  are  made  here 
from  the  gentlemen  that  propose  this  resolution,  this  constitutional 
amendment,  and  from  the  gentlemen  who  may  be  opposed  to  the  adni)- 
tion  of  this  amendment,  will  be  prompted  by  an  earnest  and  sin- 
cere desire  to  arrive  at  the  truth — the  wisdom  of  the  passage  of  this 
amendment.  There  will  be,  I  am  sure,  no  prejudice  on  the  part  of  the 
committee.  I  for  one  will  say  my  mind  is  open,  and  I  want  to  make  a 
thorough  investigation  of  the  merits  of  the  matter  before  me,  after  hear- 
ing, as  far  as  we  can  consistently  with  the  time  we  have,  what  may 
be  said,  pro  and  eon,  in  regard  to  this  matter;  the  committee  will  then 
review  the  evidence,  considering  all,  and  determine  on  a  report. 

This  afternoon,  since  printing  of  this  measure,  I  was  looking  through 
it,  and  I  would  like  to  ask  Senator  Gesford  or  Mr.  Leeds  some  further 
questions.  The  point  I  wish  first  to  inquire  about  is,  is  it  intended  in 
section  thirty-six,  on  page  two,  in  the  paragraph  reading: 

"Until  the  Legislature  shall  prescribe  such  rates  as  aforesaid,  or  in 
the  event  that  any  such  prescribed  rates  shall  from  any  cause  become 
inoperative,  the  rates  of  charges  for  the  transportation  of  passengers  on 
all  railroads  in  this  State  whose  gross  annual  earnings  are  more  than 
$4,000  a  mile,  shall  be  3  cents  per  mile,  and  the  charges  for  the  trans- 
portation of  freight  by  any  such  railroads  shall  be  the  rates  specified 
in  the  following  tariff,  hereby  designated  as  the  '  California  Distance 
Tariff.' » 

Is  it  the  intention  of  the  proponents  of  this  resolution  to  fix  a  limit 
below  which  a  road  could  not  go  in  case  of  emergency  for  the  encourage- 
ment of  traffic?  How  would  you  consider  that,  Mr.  Gesford?  You  say 
these  rates  shall  be  the  rates  for  passenger  traffic — 3  cents — the  rates 
prescribed;  I  apprehend  that  it  is  the  purpose  of  the  drafter  of  this  to 
fix  a  maximum  limit.     Is  that  also  the  minimum? 

Gesfokd:  No,  sir;  that  was  not  the  intention. 

Earl:  But,  observe  the  language;  does  it  not  fix  it? 

Gesford:  Yes,  but  the  words  "shall  be  not  to  exceed"  should  be 
entered. 

Earl:  It  seems  to  be  a  minimum  as  well  as  a  maximum. 

Leeds:  The  old  bill  reads  "not  to  exceed;"'  that  is  included  in  the  old 
bill  (looking  at  a  copy). 

Gesford:  That  was  left  out.  It  should  read  "not  to  exceed."  It  is 
"not  to  exceed"  on  the  old  bill,  and  you  will  observe,  where  mentioned 
above  it  also  reads  "not  to  exceed."  The  words  "not  to  exceed"  were 
omitted  unintentionally.  You  will  observe,  Mr.  Chairman,  the  words 
"not  to  exceed"  are  used  in  the  first  provision,  relating  to  the  power  of 
the  Legislature,  and  those  same  words  should  be  used  below,  also. 

Earl:  Another  matter.  It  seems  to  me  obscure.  I  followed  the  ar- 
gument very  closely,  but  it  seems  to  me  on  bottom  of  page  two,  after 
the  words  "California  Distance  Tariff"  (reading  from  the  bill): 

"The  classifications  of  property  provided  for  in  this  distance  tariff 
are  based  upon  the  'Western  Classification,'  and  the  rules  governing 
the  same  adopted  and  issued  by  the  Western  Classification  Committee, 
of  which  J.  T.  Ripley  was  Chairman,  and  which  took  effect  January 
1,  1893,  to  which  said  classification  reference  is  hereby  made;  provided, 
however,  that  no  rule  or  rules  governing  said  Western  Classification  pro- 


—  20  — 

viding  for  any  change,  modifications,  or  additions  to  the  classifications 
mentioned  in  this  distance  tarifi",  shall  have  any  application  hereto." 

I  understand  from  your  explanation  of  this  matter,  Senator  Gesford— 
I  understand  you  draw  a  distinction  between  the  language  used  in  this 
paragraph  and  the  language  used  in  the  original  amendment,  as  pro- 
posed in  the  original  amendment,  and  the  substitute  offered  at  the  last 
meeting,  referring  to  this  Western  Classification  and  taritf,  and  used 
language  to  the  effect  that  it  shall  be  considered  as  set  forth  here  to  all 
intents  and  purposes  as  if  it  were  a  part  of  the  Constitution;  perhaps 
I  did  not  apprehend  you  correctly  just  now 

Gesford:  That  is  explanatory  of  the  classification  made  in  the  Cali- 
fornia Distance  Tariff;  you  will  notice  the  first,  second,  third,  fourth, 
fifth,  A,  B,  C,  D. 

Earl:  You  mean  to  imply  that  the  Western  Classification  is  not  to  be 
considered  as  set  forth  in  the  Constitution? 

Gesford:  It  is  not  part  of  the  Constitution;  simply  referred  to  as 
explanatory  of  that  classification  referred  to. 

Sea  well:  Then  it  must  be  part  of  the  Constitution,  this  distance 
tariff;  certainly  the  California  Distance  Tariff'  is  part  of  the  Constitu- 
tion, and  the  idea  of  Mr.  Earl  is  thi?  Western  Classification  is  also 
made  part  of  the  Constitution. 

Earl:  You  will  observe.  Senator,  that  (reading): 

"No  rule  or  rules  governing  said  Western  Classification  providing 
for  any  change,  modifications,  or  additions  to  the  classifications  men- 
tioned in  this  distance  tariff  shall  have  any  application  hereto." 

Is  it  not  to  be  implied  that  the  other  rules  shall  have  application, 
and  those  rules  and  the  application  shall  be  ascertained  from  the  West- 
ern Classification? 

Gesford:  I  think  all  other  rules,  except  that  rule  two — I  refer  to  page 
one  of  the  Western  Classification  (reading): 

"When  articles  are  not  classified,  or  not  clearly  analogous  to  articles 
which  are,  a  special  ruling  must  be  asked  for," 

Making  it  a  shifting  classification.  Instead  of  being  a  shifting 
classification,  or  a  classification  subject  to  change,  it  is  a  classification 
subject  to  no  change. 

Earl:  I  follow  you  close.  Senator,  but  is  it  not  to  be  implied  in  line 
twenty-six  (reading): 

"  That  no  rule  or  rules  governing  said  Western  Classification  provid- 
ing for  any  change,  modifications,  or  additions  to  the  classifications 
mentioned  in  this  distance  tariff'  shall  have  any  application  hereto;" 
is  it  not  by  implication  provided  that  the  other  rules  shall  govern? 

Gesford:  The  rules  govern  the  classification;  there  is  no  question 
about  that;  but  it  seems  to  me  the  correct  construction — the  opposite 
construction  would  be  the  proper  construction — that  while  those  rules 
govern  as  rules  of  the  Western  Classification,  they  do  not  govern  to 
such  an  extent  as  to  make  that  Western  Classification  a  shifting  and 
unsettled  classification.     (Reading): 

"  No  rule  or  rules  governing  said  Western  Classification  providing 
for  any  change,  modifications,  or  additions  to  the  classifications  men- 
tioned in  this  distance  tariff  shall  have  any  application  hereto."  The 
other  rules  do  have  application  under  this  distance  tariff. 

Earl:  Then  your  idea  is  to  make  the  V\'estern  Classification  a  part  of 
this  amendment,  save  and  except  the  ruks  referred  to  on  lines  tAventy- 
six  to  twenty-nine,  making  it  a  rigid  classification? 


—  21  — 

Gesford:  If  I  understand  you,  simply  referring  to  the  ^^'cstern  Classi- 
fication as  to  fixed  rates  specified— rates  provided  for  in  the  California 
Distance  Tariff.  Now,  you  don't  have  to  make,  as  I  understand  it,  the 
Western  Classification  part  of  the  Constitution;  you  simply  refer  to  it 
as  explanatory  of  your  classification.  The  distance  tariff,  instead  of 
enumerating  under  Classification  One,  certain  articles  embodied  in  it, 
simply  refers  to  Classification  One  as  the  class  mentioned  in  the  Western 
Classification,  for  brevity  sake. 

Earl:  That  is  what  I  understand;  for  the  sake  of  brevity;  it  is  as  if 
every  commodity  in  the  Class  One,  to  which  you  refer,  was"^  set  forth  in 
the  classification  as  Class  One. 

Gksford:  Yes;  if  you  please.  I  do  not  think  it  is  any  more  a  part 
of  the  Constitution  than  the  Bible  would  be  if  you  refer  to  a  passage — 
than  the  whole  Bible  would  be. 

Earl:  But  the  portion  you  refer  to  would  become  part 

Gesford;  It  would  be  for  the  sole  purpose  of  explaining  and  stating 
this  portion.  Class  One,  for  instance,  simply  explains  the  articles  in 
the  Western  Classification,  taking  that  class.  I  wish  we  could  get 
them  all  there;  I  don't  care  how  it  would  look,  I  wish  we  could  get 
them  there;  but  the  State  Printing  Oifice  now  is  an  extravagant  concern; 
that  is  what  they  say. 

Earl:  Then,  Senator,  in  that  same  idea,  the  proviso  which  you  put 
in  there,  saving  the  adopting  of  rules  in  the  classification  regarding  any 
change,  modifications,  additions,  etc.,  it  is  intended,  is  it  not,  that  the 
other  rules  and  conditions  of  the  Western  Classification  set  out  in  this 
Western  Classification  back  here  should  have  etl'ect 

Gesford:  Should  have  the  efi'ect  to  govern  the  distance  tariff;  yes,  sir. 

Earl:  The  committee  would  like  to  hear  from  you  on  the  main  prop- 
osition, if  we  may  go  back  to  sections  one  and  two  of  this  proposed 
amendment.  If  you  would  like  to  be  heard  on  the  proposition  as  to 
the  abrogation  of  the  Railroad  Commission — as  to  the  necessity  for  it; 
as  to  the  wisdom  of  it. 

Gksford:  Mr.  Chairman,  and  Gentlemen  of  the  Committee — That,  it 
seems  to  me,  that  is  a  conclusion  that  nearly  every  one  not  directly 
interested,  has  arrived  at — in  favor  of  abrogating  that  Railroad  Com- 
mission. It  is  a  notorious  fact  that  the  Railroad  Commission  of  this 
State,  as  organized  and  existing  under  the  Constitution,  has  been  a  fail- 
ure; that  is  notorious.  The  present  Railroad  Commission — and  I  do 
not  know  one  gentleman,  and  I  am  only  speaking  of  them  now  as  Rail- 
road Commissioners,  am  not  acquainted  Avith  any  one  of  them — but  if 
it  is  true  what  is  said  of  them  in  the  public  press,  and  among  reputable 
people  of  this  State,  if  it  is  true  what  is  said  of  them,  I  do  not  want  to 
be  acquainted  with  them.  The  Railroad  Commission  of  this  State  has 
done  nothing  to  lighten  the  burdens  of  the  producer^  and  people;  there 
is  a  crying  demand  for  the  abrogation  of  that  Railroad  Commission. 
Great  political  parties  have  taken  hold  of  the  matter;  county  political 
conventions  have  taken  hold  of  the  matter.  There  has  been  a  crying 
demand  for  the  abrogation  of  that  Commission  because  it  has  been 
proven  a  failure.  Railroad  Commissions  in  other  States  seem  to_  have 
proven  a  success.  I  understand  that  in  most  States,  where  Railroad 
Commissions  are  in  operation,  they  have  proven  successful,  but  for  some 
reason  or  other  best  known  to  the  Railroad  Commission  itself,  it  is  a 
failure  to-day  in  California.     And  while  it  is  true  that  there  is  some 


—  22  — 

objection  on  the  part  of  many  citizens  to  relegating  again  to  the  Legis- 
lature the  power  to  fix  freights  and  fares,  I  believe,  with  the  limitation 
provided  by  this  amendment,  that  we  will  have  an  improvement  on  the 
administration  of  this  power,  and  get  a  better  system,  a  better  schedule 
of  freights  and  fares.  Now,  of  course,  I  do  not  suppose  this  committee 
wants  to  go  into  the  question  as  to  whether  the  Railroad  Commission, 
as  at  present  organized  and  existing,  performs  its  duty. 

Ska  well:  The  scope  of  this  constitutional  amendment  is,  the  people 
shall  fix  the  maximum— the  representatives  of  the  people  shall  fix  the 
freights  and  fares. 

Gesford:  That  is  the  purpose  exactly.  That  is  the  proposition  in  a 
nutshell;  in  other  words,  taking  it  out  of  the  liands  of  three  men  to 
control  this  matter,  and  let  the  Legislature  control  it,  within  these  lim- 
itations. 

Earl:  And  it  is  the  wisdom  of  the  move — dispensing  with  the  ques- 
tion of  what  the  Railroad  Commission  is  or  may  have  been  in  Califor- 
nia— it  is  this  question  I  would  like  to  hear  in  regard  to,  and  I  think  I 
voice  the  sentiment  of  most  of  the  committee;  is  it  wise  to  cast  back 
into  the  Legislature  the  regulation  of  the  transportation  companies? 

CtESFORd:  Mr.  Chairman,  and  Gentlemen  of  the  Committee — That,  I 
think — I  think  providing  a  maximum  rate  as  we  do  in  this,  it  is  per- 
fectly safe  to  do,  to  place  it  back  into  the  hands  of  the  Legislature.  I  do 
not  believe  that  the  difficulties  will  arise  that  are  arising  in  the  present 
method  of  the  business  of  freights  and  fares.  I  would  not  be  in  favor 
of  relegating  this  matter  to  the  Legislature  without  provision  as  to 
maximum  rates.  I  believe  there  ought  to  be  some  limitation;  that  is 
about  all  there  is  to  be  said  on  the  proposition,  unless  you  want  to  go 
into  the  question  as  to  whether  the  Railroad  Commission  shall  be 
abolished  because  the  three  Railroad  Commissioners  do  not  do  their 
duty. 

Earl:  The  idea  I  have  in  mind  is  this,  making  it  more  specific  and 
particular:  Is  the  comparative  wisdom  between  the  scheme  as  herein 
proposed,  the  abrogation  of  the  Railroad  Commission  and  fixing  maxi- 
mum rates,  etc.,  between  that  and  the  service  of  a  Commission  to  regu- 
late the  transportation  companies;  and  my  thought  lies  along  the  line, 
that  theoretically,  the  subject  is  one  so  intricate,  the  subject  of  rate 
making  for  transportation  companies,  that  theoretically,  at  least,  the 
service  of  several  men  sitting  for  a  term  of  years  could  more  intelligently 
act  than  one  hundred  and  twenty  men  sitting  for  any  length  of  time.  It 
is  along  that  line  of  discussion  that  I,  for  one,  as  a  member  of  this  com- 
mittee, would  like  to  hear  arguments  on  the  comparative  wisdom  of  the 
Commission  fixing  and  regulating  rates,  etc.,  and  the  method  that  is  pro- 
posed in  this  amendment  of  placing  the  matter  back  into  the  hands  of  the 
Legislature,  that  is  generally  composed  of  new  members,  not  sitting 
continuously,  and  therefore  uninformed  in  any  of  the  technical  matters; 
for  instance,  if  there  was  a  Commission  of  three  men  of  experience  and 
wisdom — not  being  personal,  say  Mr.  Leeds — three  such  men — would 
it  not  be  more  successful  in  this  matter  than  the  Legislature  of  one 
hundred  and  twenty  men?     That  is  the  thought  I  have  in  mind. 

Gesford:  I  would  say,  Mr.  Chairman,  that  if  you  could  find  three  men 
possessing  the  information  necessary,  not  to  be  controlled  by  any  out- 
side influence,  they  might  be  able  to  fix  a  schedule  of  freights  and  pas- 
senger rates  that  would  be  just  and  equitable,  and  give  satisfaction  to 


-   23  — 

the  people  even  under  the  existing  law.  That  fixes  a  maximum  hevond 
which  the  Legislature  cannot  go.  Heretofore,  of  course,  the  Legislature 
has  been  charged  with  having  been  corrupted  by  use  of  money  in  fixi.g  of 
rates.  Now  the  rates  will  be  fixed  by  the  Constitution;  they  are  fixed 
by  the  Constitution  until  the  Legislature  fixes  some  other  rates.  If  the 
railroad  people  want  any  difterent  rates,  the  burden  is  on  them;  it  will 
be  a  good  deal  harder  for  the  railroad  companies,  if  they  are  so  disposed, 
to  corrupt  the  Legislature,  where  the  burden  is  on  them  to  obtain  legis- 
lation. Under  this  maximum  rate,  they  must  obtain  legislation.  Ln 
other  words,  if  the  rates  fixed  under  the  Constitution  are  not  satisfac- 
tory, the  burden  is  on  them  to  ask  for  a  higher  rate. 

Earl:  Could  they  ask — they  could  not,  of  (ourse,  ask  for  any  higher 
rate  than  3  cents  per  mile? 

Gesford:  Supposing  the  Legislature  fixed  the  rate  at  2^  cents  per 
mile,  then  the  railroad  wanting  a  change  would  have  to  ask  for  relief. 

Seawell:  But  it  is  fixed  now;  they  must  change  it.  If  we  incorpo- 
rate this  in  the  Constitution,  they  are  authorized  to  change  it  under  the 
provisions  of  this  constitutional  amendment^the  rates  enacted  in  this 
schedule;  now,  to  change  those  rates,  it  will  require  afiirmative  legisla- 
tion on  the  part  of  the  Legislature,  and  if  they  are  too  low — if  the  Legis- 
lature goes  too  low,  then  the  railroad  company,  if  an  injustice  were  done 
them,  would  be  required  to  come  in  and  say  to  the  Legislature:  "You 
are  limited  by  the  Constitution  to  a  certain  amount,  but  we  ask  you  to 
increase  the  rates  on  this  classification." 

Earl:  That  would  be  seeking  relief,  provided  the  Legislature  cut  the 
rate  down.  I  would  like  to  ask  further — passing  the  matter  as  to  the 
wisdom  of  the  acts  of  the  Legislature — now,  speaking  specifically,  the  . 
Southern  Pacific,  a  corporation,  as  it  is  generally  understood  to  be,  is  the 
lessee  of  lines  operating  several  roads  in  this  State — how  many  I  do  not 
know,  but  suppose  five,  six,  seven,  eight,  ten — the  Central  Pacific, 
Southern  Pacific,  Western  Pacific,  Northern  Railway,  running  to  Berke- 
ley, and  others.  Now,  that  system  of  roads  is  operated  as  a  system,  as 
it  is  designated,  and  will  come  under  the  sweep  of  the  proposition  as 
suggested  here: 

(Reading:) 

"  Railroads  shall  be  considered  independently  in  computing  distp.nces; 
except,  however,  that  a  system  of  railroads  consisting  of  leased,  operated, 
or  independent  roads,  controlled  under  a  common  management, 
although  working  under  different  charters,  shall  be  considered  and 
treated  as  one  road,  and  the  distance  shall  be  computed  over  the  shortest 
operated  line  composed  of  two  or  more  of  said  roads." 

Now,  suppose  for  a  moment,  that  the  Southern  Pacific  should  disin- 
corporate and  cease  to  operate  these  roads  under  its  management,  and 
[diverse  corporations,  which  are  lessors  under  this  system  now — sup- 
pose they  should  operate  independently  and  go  in  and  lease  to  some 
[other  and  smaller  roads,  or  the  gross  earnings  of  these  different  roads 
making  up  the  general  system  should  be  less  than  $4,000  per  mile;  if 
they  should  operate  independently,  on  a  smaller  system,  your  idea  is 
they  would  not  go  under  this  regulation  of  Section  36;  the  maximum 
rates  herein  prescribed  would  not  apply  to  them  if  they  acted  inde- 
[pendently,  and  their  rates  fall  under  $4,000  per  mile,  gross  earnings? 

Gesford:  Of  course  not. 

Earl:  Suppose  that  on  operating  those  lines,  I  presume  some  of  them 


—  24  — 

are  now  earning  less  than  $4,000  per  mile,  yet  under  this  proposition 
here  prescribed,  they  come  within  the  maximum  rates  fixed  here,  be- 
cause they  belong  to  a  system.  I  do  not  know  as  to  the  stockholders, 
but  suppose  that  the  stock  is  controlled  by  a  number  of  individuals, 
who  control  most  of  the  stock  in  the  several  corporations;  would  not 
this  operate  in  a  measure  on  the  stockholders  of  these  individual  corpo- 
rations? A  road  not  obtaining  $4,000  per  mile,  yet  coming  under  this 
rate,  whereas,  roads  which  are  not  paying  four  thousand  per  mile,  and 
are  not  part  of  the  Southern  Pacific  system,  would  be  able  to  charge  a 
larger  rate.  Is  it  not  injustice  to  the  stockholders  in  the  combined 
system,  for  their  road  to  come  within  the  sweep  of  this  amendment;  is 
it  not  an  injustice;  does  it  not  deter  them  leasing  the  road,  for  in- 
stance? 

Grsford:  I  do  not  think  so.  If  I  understand  you  correctly,  there  is 
a  system  of  roads,  and  that  system  earns  less  than  $4,000  p"fer  mile;  of 
course  the  Legislature  fixes  a  different  rate. 

Earl:  The  stockholders  in  a  particular  corporation  that  might  be 
leased  to  a  common  management,  would  not  receive  as  much  on  their 
investment  as  a  corporation  which  does  not  lease  and  operates  inde- 
pendently, and  does  not  come  under  the  maximum  rate. 

Gesford:  Yes. 

Earl:  And  yet  some  roads  might  be  built  and  operated — running,  say 
through  fertile  districts,  and  having,  for  instance,  say  like  the  Yreka 
road — being  complete  practically  in  itself,  might  be  able  to  operate  inde- 
pendently, and  gain  larger  returns  from  an  investment,  than  a  road  run- 
ning, for  instance,  in  the  San  Joaquin  Valley,  costing  as  much  per 
mile,  and  which,  in  order  to  operate  at  all,  must  lease  itself  to  some 
other  and  larger  company,  and  by  this  provision  being  put  in  here,  the 
rate  of  profit  for  this  investment  to  the  San  Joaquin  Valley  road  would 
be  less  than  that  for  the  Yreka  road. 

Gksford:  Yes,  it  might;  but  I  don't  see  that  we  can  help  that. 

Earl:  Mr.  Leeds,  ■^'ill  you  give  the  committee  a  resume  of  the  figures 
you  gave  the  other  night?     Senator  Seawell  is  here  to-night. 

Leeds:  I  don't  know  whether  I  can  give  them  in  the  exact  order  as  I 
gave  them  the  other  evening.  One  statement  which  I  made  the  other 
night  was  that  the  earnings  of  the  roads  within  the  State  of  California, 
including  the  entire  system  of  the  Southern  Pacific  Comi)any,  were 
$9,021  per  mile;  that  covers  three  thousand  four  hundred  and  ninety- 
eight  miles  of  road;  that  the  interest  on  bonded  debt  paid  by  the 
Pacific  System  upon  some  of  that  was  $8,675,587  42.  I  have  since 
learned  that  the  capitalization  on  that  three  thousand  four  hundred  and 
ninety-eight  miles  of  road — their  funded  debt — is  $144,494,500,  or  $41,305 
per  mile;  the  capital  stock  of  same  would  be  $165,311,300,  or  $47.- 
255  50  per  mile,  and  an  aggregate  capitalization  for  the  two,  funded 
debt  and  bonded  issues,  of  $88,560  50  per  mile.  Taking  the  entire 
Pacific  System,  if  you  please,  now,  the  rate  per  ton  per  mile — giving  this 
backwards,  however 

Eakl:  Meaning  by  the  entire  Pacific  System, from  El  Paso  and  Port- 
land to  San  Francisco,  and  from  Ogden,  also 

Leeds:  Yes;  the  rate  per  ton  per  mile  on  through  freight  was  1.119 
cents;  on  local  freight,  2.699  cents,  and  on  all  freight,  1.835  cents;  that 
the  local  freight  is  two  and  a  half  times  more  than,  or  226.6  per  cent  of 
the  rate  charged  on  the  through.     The  average  haul  on  through  freight 


—  25  — 

was  906  miles  on  each  ton,  and  on  local,  101^;  the  aggregate  on  all, 
206  miles.  The  rate  per  ton  per  mile  on  the' Atchiso?,  fopeka,  and 
Santa  Fe  road,  on  all  its  tonnage,  is  1.219  cents.  The  difference  between 
them  is  .616  of  a  cent,  or  a  little  over  .6  of  a  cent  per  ton  per  mile 
between  the  two.  The  average  train  on  the  Pacific  Svstem  of  the 
Southern  Pacific  Company  is  124.63  tons;  the  Atchisonli  Topeka,  and 
Santa  Fe,  118.84.  The  difference  is  5.79  in  favor  of  the  Southern 
Pacific.  They  consume  fifty-six  pounds  of  coal  to  haul  this  one  hun- 
dred and  twenty-four  and  a  fraction  tons,  as  against  the  Atchison's  one 
hundred  and  eight  pounds  in  carrying  118.84  tons.  The  cost  to  the 
Southern  Pacific,  as  reported,  is  $5  79  per  ton;  the  Atchison,  $2  41— per 
mile  run  by  their  locomotives  per  ton  of  coal.  I  will  say  in  explanation 
that  this  amount  of  coal  per  mile  run  for  locomotives  includes,  I  believe, 
all  coal  consumed  by  both  companies.  The  miles  of  run  per  ton  of  coal 
on  the  Atchison  is  26.12,  and  by  the  Southern  Pacific,  29.74,  indicating 
that  notwithstanding  they  use  less  coal,  they  make  better  mileage  with  a 
ton  of  coal  than  roads  east  of  the  Rocky  Mountains. 

The  percentage  of  gross  earnings  to  operating  expenses  on  the  South- 
ern Pacific  is  59  per  cent. 

Earl:  The  what?  I  don't  exactly  understand.  A.  The  percentage 
of  gross  earnings  used  in  operation  on  the  Southern  Pacific  is  59  per 
cent;  on  the  Atchison  69.19  percent.  Following  are  some  of  the  gross 
earnings  on  different  parts  of  the  Southern  Pacific  on  trafiic  in  Califor- 
nia: Southern  Pacific  of  California,  gross  earnings,  $9,279,822  50,  or 
$6,611  54  per  mile;  they  use  58i  per  cent  in  operations.  South  Pacific 
Coast  earn  $1,107,772  87,  or  $10,631  56  per  mile;  they  use  64.55  per 
cent  in  operation.  California  Pacific  earned  $1,528,047  72,  or  $13,242  79 
per  mile;  they  use  50.31  per  cent  in  operation.  The  earnings  of  the 
Pacific  system,  4,625  miles,  is  $8,002  18  per  mile,  of  which  they  use  59 
per  cent.  The  Atchison  earnings,  $5,114  57  'per  mile,  of  which  they 
use  69.19  per  cent.  The  percentage  of  empty  cars  and  loaded  on  the 
Southern  Pacific  (Pacific  System)  was  24.79;  the  Atchison,  28.32.  The 
■coal  on  the  Southern  Pacific,  according  to  their  report,  cost  them  8.9 
per  cent  of  their  gross  earnings;  on  the  Atchison,  7.8  per  cent.  I  think 
that  is  about  all  the  figures  I  gave  the  other  night.  Now,  I  w^ant  to 
say  a  word  in  reference  to  a  question  you  asked  Mr.  Gesford  a  few 
minutes  ago.  I  am  not  an  attorney,  but  I  have  made  some  observation 
of  your  law  here  in  regard  to  the  Railroad  Commission.  It  has  been  a 
notable  fact,  at  least  so  far  as  I  am  connected  with  it,  ever  since  the 
Railroad  Commission  has  been  in  existence,  that  all  rulings  they  made, 
whether  favorable  or  unfavorable  to  the  railroad  company,  were  put  in 
effect  under  written  protest,  claiming  that  this  Commission  had  no 
authority  to  regulate  the  rates  and  fares,  indicating,  I  should  think, 
that  if  anything  were  done  that  was  considered  undesirable  the  consti- 
tutionality of  the  proposition  would  be  tested,  and,  judging  from  what 
has  taken  place  in  Texas,  it  would  appear  that  you  have  relegated  all 
the  power  you  have  in  the  State  to  fix  rates  and  fares,  to  three  men  who 
are  supposed  to  have  the  power,  or  rather  the  authority,  but  not  the 
power  to  enforce  what  they  may  propose.  And  whether  this  proposition 
-were  put  in  effect  or  not.  if  the  law,  as  it  stands  to-day,  is  effective,  it 
strikes  me  it  should  be  tested  and  something  put  in  effect,  if  it  is  not, 
Avhich  will  reach  the  case. 

Earl:  You  refer  to  the  fact  that  by  the  terms  of  the  present  Consti- 


—  26  — 

tution,  regarding  the  powers  of  the  Railroad  Commission,  that  the  rates 
which  they  fix  are  not  prima  facie,  but  presumed  to  be  just  and  reason- 
able?    A.  It  would  be  necessary  to  go  into  the  Courts  to  enforce  that. 

Earl:  The  Courts  have  the  power,  whether  coming  through  the  Legis- 
lature or  Commission,  or  any  other  governmental  agency,  to  fix  rates, 
with  this  proviso  and  limitation,  that  the  rates  fixed  must  be  reasonable. 
I  believe  that  was  the  statement  you  gave  at  the  last  session  of  the  com- 
mittee, was  it  not?  A.  Yes;  but  the  Commission  do  not  act,  and  seem 
to  be  powerless. 

Earl  :  I  was  referring  to  the  Constitution.  What  they  fix  is  presumed 
to  be  reasonable  and  just;  their  acts — the  reasonableness  of  their  acts — 
is  not  reviewable  in  the  Co'irts.  It  seems  to  me  the  intent  of  the 
framers^f  that  organic  law  was  to  give  absolute  power  to  the  Commis- 
sion. That  was  the  theory  under  which  the  organic  law  was  framed. 
By  judicial  interpretation  since  then  the  power  to  fix  rates  has  a  limit- 
ation placed  on  it,  the  limitation  being  that  the  rates  are  and_  must  be 
reasonable  and  just  to  the  carrier.  Now,  so  far  as  our  Constitution  is 
concerned,  that  feature  of  the  Constitution  giving  power  to  the  Com- 
mission, undoubtedly  its  form,  so  far  as  the  absolute  conveying  of  the 
power  is  concerned,  I  think  is  recognized;  and  I  understand  you  stated 
the  other  evening  that  the  rates  fixed  must  be  just  and  reasonable, 
otherwise  they  could  be  annulled  by  the  Courts. 

Leeds:  That  is  very  true.  In  a  decision  recently  I  think  the  Court 
made  use  of  this  language,  that:  "  Whether  the  rates  prescribed  were 
reasonable  or  not  they  were  still  subject  to  the  sanction  of  the  Court." 

Earl:  This  is  a  question  of  reasonableness.  The  Railroad  Commis- 
sion, under  the  organic  law  of  this  State,  can  get  out  a  writ  of  manda- 
mus, or  a  writ  of  injunction,  as  they  have  a  mind  to,  enforcing  the 
application — or  compliance,  rather — to  the  schedule  of  rates  they  may 
prescribe,  and  if  they  fix  the  rates  at  given  figures,  say  two  cents  per 
mile,  and  the  carriers  decline  to  conform,  they  would  get  out  a  writ  of 
mandamus  against  the  carrier;  and,  in  order  to  prevent  the  rates  becom- 
ing eflective  or  operative,  the  railroad  would  have  to  go  into  Court  and 
show  its  injustice,  otherwise  the  rates  would  apply.  Tliey  have  that 
power,  Mr.  Leeds.  A.  They  may  have  the  power,  but  do  not  seem  to 
exercise  it. 

Earl:  Yes,  the  power  is  lodged  there.  I  was  trying  to  ascertain  your 
thoughts,  so  far  as  the  power  is  concerned;  you  say  they  have  the  power, 
but  no  way  of  putting  it  into  efi'ect.  A.  It  must  go  through  the  Court 
whether  reasonable  or  not;  they  must  secure  the  enforcement  of  what 
they  do  whether  reasonable  or  not.  Regarding  the  practicability  and 
use  of  the  Western  Classification,  which  may  be  brought  up  if  it  is  put 
in  efi^ect,  say  for  two  years,  without  any  fiuctuations,  I  will  only  say 
that,  on  staples,  changes  in  the  classification  are  seldom  made.  Articles, 
say  taking  fifth  class,  or  Class  A,  which  carry  a  great  amount  of  ton- 
nage, are  not  very  frequently  changed.  And  the  changes  which  are 
made,  are  made  more  frequently  to  facilitate  the  interchange  of  business 
between  lines  which  cover  more  largely  less  than  carload  shipments 
than  carload  business,  and  would  have  less  efi'ect,  so  far  as  the  changes 
that  may  occur  through  the  instrumentality  of  the  Classification  Com- 
mittee, than  might  be  expected  from  the  number  of  them.  And  there 
is  also  this,  that  a  large  number  of  those  changes  are  made  on  manufact- 
ured articles,  the  factors  of  which  you  have  not  here,  and  henc  they 


would  not  very  seriously  interrupt  the  business  of  the  State;  the  appli- 
cation of  it  would  only  be  on  business  picked  up  at  one  point  and  laid 
down  at  another  point  in  the  State.  Furthermore,  this  classitication 
covers  a  very  large  territory.  It  has  got  a  very  large  number  of  arti- 
cles in  it,  perhaps,  that  seldom  move  in  any  one  locality;  there  are 
something  like  fiity-two  or  fifty-three  hundred  articles  in  the  classifi- 
cation. Perhaps  5  per  cent  of  those  articles  would  be  75  per  cent  of  the 
tonnage  that  moves  from  one  station  in  California  to  another,  so  that 
whatever  changes  might  be  made  in  that  classification,  would  not  likely 
rnaterially  disturb  the  sitiiation  in  California  if  an  inflexible  applica- 
tion be  made.  It  would  not  disturb  the  situation  even  if  it  were  put  in 
effect  for  two  years  without  any  changes.  Besides,  the  hardships  that 
might  occur  by  reason  of  such  changes,  would  be  more  likely  to^ccur 
by  reason  of  a  reduction  than  by  an  advance.  There  is  no  proviso  in 
the  resolution  that  I  know  of  that  prevents  a  rate  being  made  which 
would  take  care  of  any  exigency  that  might  arise.  You  have  but 
seldom  changed  the  classification  here  for  many  years  past.  The  Board 
of  Railroad  Commissioners  are  given  the  full  power  to  regulate  this 
matter  of  rates  of  freight,  and  I  don't  believe  any  one  can  point  to  a 
time  within  the  past  two  years  that  the  Railroad  Commission  have 
made  any  revision  of  the  classification,  or,  in  fact,  that  they  ever  made 
any.  Furthermore,  the  Western  Classification  is  in  effect  in  Southern 
California;  it  is  also  in  efiect  in  this  portion  of  the  State  on  interchange 
business  by  the  Southern  Pacific  Company,  and  I  do  not  see  just  exactly 
why  it  became  necessary  for  them  to  put  the  Western  Classification  in 
Southern  California,  and  when  the  road  applies  it  on  through  business, 
or  interchange  business,  in  this  part  of  the  State,  why  it  becomes  neces- 
sary to  hold  in  effect  two  separate  local  classifications  in  this  part  of  the 
State,  and  why  they  have  made  no  changes  in  them  by  reason  of 
changes  which  may  have  been  made  in  the  Western  Classification,  pro- 
vided the  business  might  require  it. 

Earl:  I  would  suggest,  Mr.  Leeds,  that  there  is  a  competitive  road 
down  there  that  uses  the  Western  Classification?  A.  But  the  Commis- 
sion have  the  power,  and  they  must  have  put  it  in  effect  down  there;  it 
certainly  would  not  have  gone  into  effect  without  their  doing  so;  there 
is  no  power  to  make  a  rate  in  the  State  without  that;  they  must  ha^^e 
done  it. 

Earl:  You  understand  from  the  language  of  the  proposed  section 
that  the  Legislature  can  change  this  classification?     A.  Certainly. 

Earl   (reading): 

"The  Legislature  shall  have  the  power  and  it  shall  be  its  duty  to 
establish  rates  of  charges  for  the  transportation  of  passengers  and 
freight  by  all  railroads  operated  in  this  State." 

Q.  You  would  give  them  full  power  to  fix  the  rates?  A.  I  understand 
that  gives  full  power  to  change  in  any  way  that  was  most  expedient. 

Seawell:  You  will  notice  there  is  a  proviso. 

Earl:  The  question  is  whether  the  Western  Classification  can  be 
changed  by  the  Legislature.  If  that  power  is  given  to  the  Legislature  by 
this  language  of  Section  36,  can  they  fix  the  rates  or  revise  the  classi- 
fication? There  is  a  difference  between  this  bill  and  the  bill  first  pro- 
posed.    The  language  is  very  obscure. 

Gesford:  They  have  the  -power.  Providing  they  do  not  fix  a  higher 
rate  than  is  reasonable,  they  may  fix  any  rate  they  see  fit. 


—  28  —  I 

Earl:  They  would  have  to  change  the  classes  in  the  Distance  Tariff, 
as  that  is  where  the  rate  is  ascertained. 

Leeds:  Suppose  they  want  to  make  a  higher  rate  than  on  Class  Third 
— a  lower  rate,  rather — and  that  it  shall  be  Class  B. 

Earl:  Can  thev  do  it?     A.  Yes;  why  not? 

Earl:  Well,  what  roads,  Mr.  Leeds,  in  this  State  now  would  be 
affected  by  this  amendment;  in  other  words,  those  whose  earnings  are 
$4,000  a  mile  or  over? 

Leeds:  The  Southern  Pacific  Company,  California  Southern,  North 
Pacific  Coast,  and  the  San  Francisco  and  North  Pacific. 

Earl:  North  Pacific  Coast;  the  so-called  Donahue  road?  A.  Yes, 
sir;  and  also  the  Areata  and  Mad  River. 

Q.  .That  is  a  narrow  gauge;  and  the  Santa  Cruz  Road,  that  is  part  of 
the  Southern  Pacific  system?     A.  Yes;  I  believe  those  are  all. 

Q.  The  Southern  California  is  the  Atchison  branch?  A.  Yes;  the 
Atlantic  and  Pacific  is  not  in,  but  the  Southern  California  would  be.  I 
also  say  further,  that  what  is  proposed  is  no  experiment;  that  such  a 
tariff  is  in  eflect  in  almost  all  States  east  of  the  Rocky  Mountains,  and 
there  is  nothing  in  this  proposed  here  different  than  the  basis  applying 
to  other  Territories  and  States. 

Earl:  What,  Mr.  Leeds — referring  to  some  information  you  afforded 
us  last  Monday  evening — what  basis  is  to  be  considered  in  fixing  a  rate 
which  is  just  and  reasonable;  what  elements? 

Leeds:  I  should  say  that  the  operating  expenses,  and  a  reasonable 
return  on  the  investment  of  the  property. 

Q.  Would  bonded  indebtedness — the  interest  on  bonded  indebtedness — 
be  an  element?  A.  If  it  were  reasonable.  I  do  not  believe  that  the 
people  ought  to  be  called  upon  to  stand  between  a  purchaser  of  bonds 
and  a  dishonest  capitalization  of  property. 

Q.  How  can  we  arrive  at  cost,  and  the  honesty  or  dishonesty  of  cap- 
italization? A.  There  are  plenty  of  men  competent  to  tell  what  a  road 
will  be  built  for;  that  can  be  very  closely  demonstrated. 

Q.  What  it  has  been  built  for,  but  not  du])licated  or  can  be  duplicated 
for?  A.  I  know  of  no  good  reason  why  a  piece  of  property  is  worth 
more  than  it  can  be  rebuilt  for  to-day. 

Q.  But  it  is  the  investment  that  should  be  considered?  A.  But  should 
there  be  any  discriminations  between  investments  one  for  one  and 
another  for  another;  should  you  direct  everybody  in  their  investments, 
whether  good  or  bad? 

Q.  It  is  different,  however,  with  investments  in  which  the  public  are 
interested.  The  State  having  the  power,  has  laid  down  in  the  so-called 
Green  cases — having  the  power  to  fix  a  rate,  and  by  judicial  determina- 
tion held  that  this  rate  must  be  just  and  reasonable — that  limitation 
being  on  the  State  to  fix  rates  in  any  business  like  a  carrier's  business, 
or  elevator,  water  companies,  gas  companies,  etc.,  is  it  not  inevitable 
that  the  cost  of  the  investment  itself  must  be  considered;  not,  what  in  the 
course  of  time,  by  cheapening  of  material  and  labor,  and  perhaps  other 
items,  a  duplicate  would  cost?  A.  Perhaps;  we  have  been  told  in  Cali- 
fornia, here,  within  a  few  months  past,  that  the  owners  of  this  road 
have  never  received  any  return  on  the  investment,  and  some  were  barely 
able  to  meet  their  funded  debt  obligation.  I  would  like  to  ask  if  it  is 
reasonable  here — that  there  is  any  road  in  California — in  the  valleys 
especially^that  ought  to  represent  a  capitalization   of   $163,073  per 


—  29  — 

mile;  that  ought  to  represent  a  capitalization  of— a  bonded  indebted- 
ness of  $59,126,  and  another  $54,349,  making  an  aggregate  of  $103,475; 
another  one  aggregating  $58,434;  another  $110,576;  another  $41,435; 
and  still  another,  $76,301  97?  I  do  not  know  whether  it  would  be 
reasonable  to  expect  the  public  to  put  up  for  earnings  on  that  kind  of  a 
proposition.  I  should  think  not.  That  represents  three  thousand,  four 
hundred  and  ninety-eight  miles  of  railroad,  which  you  are  expected  to 
put  up  the  necessary  money  to  pay  the  interest  on  a  capitalization 
,  amounting  to  $309,805,800,  or  $88,560  average  per  mile. 

Earl:  Bonded  indebtedness?  A.  No,  sir;  that  is  the  aggregate  of  it; 
the  bonds  amounts  to  $41,305.  The  aggregate  of  the  capital  stock  is 
$47,255. 

Q.  In  turning  over  some  Interstate  Commerce  reports  this  afternoon, 
I  find  it  laid  down  that  the  matters  to  be  considered  in  fixing  rates 
were  the  operating  expenses,  bonded  debt,  fixed  charges,  and  dividend 
OTi  the  capital  stock.  A.  Well,  let  us  see  if  you  are  being  fairly  treated 
on  that  basis.  The  earnings  per  mile  of  road  on  this  portion  I  have 
talked  about  is  $9,021 ;  taking  the  entire  Pacific  System  it  is  $3,002. 
The  earnings  of  the  road  in  Oregon  is  $3,502  37;  the  earnings  of  the 
road  in  New  Mexico  and  Arizona  is  $5,506  16;  the  earnings  of  the  Cen- 
tral Pacific,  for  the  entire  system,  is  $12,224  76  per  mile;  the  earnings 
of  the  South  Pacific  Coast  (narrow  gauge)  road  is  $10,651  66;  the  Cali- 
fornia Pacific  is  $13,247  79  on  115.44  miles,  indicating  at  least  $10,000 
a  mile  for  all  the  roads  inside  the  limits  of  the  State  of  California. 

Q.  Leaving  the  Southern  Pacific  road  out  of  consideration,  Mr.  Leeds, 
are  those  the  elements  that  make  up  the  basis  upon  which  a  rate  is  to 
be  calculated?     A.  Do  you  want  to  know  how  I  made  up  this  tariff"? 

Q.  I  will  arrive  at  that  presently.  Are  those  the  elements  entering 
into  the  calculation  upon  which  a  fair  rate  is  ascertained;  that  is  ta 
say,  the  operating  expenses,  the  interest  on  bonded  debt,  the  fixed 
charges,  and  the  dividend  on  capital  stock?  A.  Well,  I  don't  believe 
you  ought  to  put  in  the  dividend  on  capital  stock  here  unless  it  costs 
something. 

Q.  Taking  the  matter  theoretically,  are  those  the  elements?  A. 
Theoretically,  you  would  want  to  find  out  how  much  it  costs  to  do  busi- 
ness, and  if  you  have  an3^thing  left  for  a  dividend  on  capital  stock, 
make  a  dividend  on  that. 

Q.  The  elements  of  debt — the  interest  on  debt  comes  in?  A.  Well, 
the  bonds  are  supposed  to  cover  that,  unless  you  have  a  floating  debt, 
which  you  have  to  pay,  of  course. 

Q.  You  were  about  to  make  some  observation  when  I  discussed  the 
matter?  A.  I  was.  I  made  a  good  many  comparisons  of  rates,  charged 
in  California,  with  those  charged  in  other  portions  of  our  country  east 
of  the  Rocky  Mountains.  I  discovered  that,  on  general  merchandise, 
you  were  paying  considerably  more  than  30  per  cent  higher  rates,  on 
actual  tests  as  to  the  business  done.  On  wheat,  about  23  or  24  per 
cent;  on  other  grain,  45  per  cent.  The  tonnage  here,  taking  the 
earnings  of  the  roads  and  the  rates,  was  greater  on  the  roads  in  Cali- 
fornia per  mile,  than  it  was  on  the  roads  for  which  I  made  the  com- 
parison, from  the  fact  that  their  gross  earnings  are  a  greater  percentage 
over  the  road  I  made  the  comparison  with,  than  30  per  cent,  or  any 
other  per  cent  in  the  difference  in  the  price  charged.  I  then  undertook 
to  make  a  tariff  which  I  believed  would  make  an  aggregate  yield  on 


—  30  — 

the  tonnage  moved,  as  large  as  that  accninig  to  the  roads  for  which  I 
made  the  comparison.  These  comparisons  were  made  mostly  with 
Kansas  and  Nebraska  roads.  ^     .^^  j  o     xi, 

Q.  Those  roads  were  built  since  the  Central  Pacific  and  bouthern 
Pacific  railroads?  A.  Well,  there  was  a  good  deal  of  the  Southern  Pa- 
cific road  built  about  the  same  time  as  these  roads  were. 

Q.  The  Atchison  road  you  were  speaking  about  was  built  more  recently, 
was  it  not?  A.  Well,  it  was  begun  pretty  early,  and  considerable  of  it 
built  within  four  or  five  years  of  the  time  of  the  building  of  the  Central 

Q.  Have  you  any  data  that  would  give  us  a  comparison  between  the 
cost?     A.  No,  sir;  I  have  not. 

Q.  If  you  have  any  farther  information  to  offer  the  committee,  we 
would  be  very  glad  to'^have  it.     A.  I  believe  I  have  not. 


Statement  of  Mr.  A.  Burrows. 

(Representing  the  Nevada  County  Narrow  Gauge  Railroad.) 

Chairman  Earl:  The  other  evening  there  were  some  gentlemen  here 
that  wished  to  be  heard,  representing  some  short  lines,  saying  that 
Thursday  would  be  an  improper  time  for  them,  or  at  least  an  incon- 
venient time.  The  committee  is  not  desirous  of  holding  a  late  session 
to-night,  but  will  afi^ord  a  few  moments  to  any  gentleman  that  desires 
to  be  heard  and  cannot  be  here  at  subsequent  sittings  of  the  committee. 

Mr.  Burrows:  I  believe  I  am  the  party  referred  to.  I  am  here  in  the 
interest  of  the  Nevada  County  Narrow  Gauge  Railroad.  I  don't  want 
to  impose  on  the  committee  by  having  the  session  taken  up.  If  I  could 
understand  that  this  committee  could  meet  at  any  convenient  time  sub- 
sequent to  Thursday  night — say  Friday  night,  or  some  night  after  to- 
morrow— I  would  try  to  be  here. 

Senator  Sea  well:  I  belong  to  six  or  eight  committees,  and  cannot 
meet  with  all  of  them.  I  will  meet  here  to-morrow  night.  Cannot  you 
come  before  the  committee  to-morrow  night? 

Burrows:  No,  sir.  I  have  a  motion  before  one  of  the  Courts  in  San 
Francisco  at  that  time,  and  must  be  there.  I  cannot  get  back  here  in 
time;  but  if  the  committee  can  tell  me  how  much  time  they  can  aflbrd 
me 

Sea  well:  About  how  long  do  you  desire;  about  half  an  hour?  A. 
Oh,  about  twenty  minutes.  I  do  not  think  I  will  be  more  than  twenty 
or  thirty  minutes. 

Seawell:  Oh,  well,  if  that  is  all,  we  will  hear  you  to-night. 

Mr.  Burrows:  Gentlemen  of  the  Committee — As  I  stated,  I  represent 
a  little  line  way  up  in  the  mountains,  known  as  the  Nevada  County 
Narrow  Gauge  Railroad.  It  runs  from  the  station  at  Colfax,  on  the 
Central  Pacific  Railroad,  to  the  town  of  Nevada  City,  a  distance  of 
twenty-two  and  one  half  miles.  The  proposed  amendment  to  the  Con- 
stitution that  is  here  before  you,  though  from  their  report  technically 
we  are  not  included,  as  a  matter  of  fact  I  will  show  you  that  we  are 
included  with  those  longer  lines;  the  receipts  of  the  road  being  not 
exactly  $4,000  per  mile,  but  thirty-nine  hundred  and  a  fraction,  leaving 


—  31  — 

us  no  margin  whatever  for  an  increase  which  we  have  a  right  to  hope 
and  expect  in  the  future;  so  that  we  are  placed  in  the  predicament,  that 
if  our  traffic  should  increase  our  receipts  would  diminish.  That  is  the 
position  we  are  placed  in,  and  that  is  one  proof  of  the  fact  that  there  is 
something  very  clumsy  about  this  proposed  amendment  to  the  Consti- 
tution, when  such  an  extraordinary  result  will  take  place  under  those 
circumstances.  The  distance,  as  I  have  stated,  is  twenty-two  and  a 
half  miles.  It  is  a  narrow  gauge  railroad,  winding  around  the  mount- 
ains, in  and  out,  here  and  there,  with  very  little  local  traliic,  except 
what  comes  from  the  two  towns  of  Grass  Valley,  with  six  thousand 
inhabitiints,  and  Nevada  City,  with  five  thousand  inhabitants;  being 
originally  built  more  for  a  wood  road  than  for  anything  else,  yet  being 
a  matter  of  vast  accommodation  to  that  portion  of  the  country,  wliich 
in  the  winter  months,  if  it  were  not  for  that  road,  you  might  say  would 
be  almost  shut  out  from  civilization,  because  the  ordinary  wagon  roads 
are  almost  impassable.  The  cost  of  that  road  was  $625,000;  it  has  a 
bonded  indebtedness  of  $260,000,  paying  interest  at  the  rate  of  8  per 
cent  per  month. 

Earl:  You  mean  per  year.  A.  Oh,  yes,  per  year;  that  is  what  I 
meant.  In  reaching  those  points  it  crosses  five  trestles  from  thirty  to 
one  hundred  feet  high,  one  of  which  is  seven  hundred  feet  long.  Wooden 
trestles  require  a  vast  amount  of  yearly  repair  to  keep  them  in  condi- 
tion so  that  they  will  be  sufficiently  safe  for  travel.  The  average  cost 
for  repairing  bridges,  etc.,  for  the  past  year,  and  several  years  past,  is 
$3,000.  The  average  cost  of  keeping  up  the  road  for  several  years  past 
has  been  $15,000.  The  average  receipts  for  the  years  1890, 1891,  and  1892, 
averages  about  $88,000,  in  round  numbers.  Those  receipts  for  1880, 
Mr.  Chairman,  amounted  to  $115,000.  The  shrinkage  that  has  occurred 
between  1880  and  the  present  time  amounts  to  $38,500,  or  thereabouts, 
yearly,  caused  by  the  stoppage  of  hydraulic  mining,  which  has  decreased 
both  the  freight  traffic,  and  also  the  passenger  traffic.  This  shrinkage 
in  the  past  ten  or  twelve  years  is  about  20  per  cent.  This  road  has  paid 
dividends  up  to  1880,  which  have  paid  the  stockholders  $21,000.  Since 
then  it  has  paid  no  dividends  whatever,  except  an  amount  to  which  I 
will  refer  in  a  few  moments,  but  it  is  not  worth  while  to  take  into  con- 
sideration. It  is  very  nominal.  The  decrease  in  population  in  Nevada 
County  during  that  period  was  20  per  cent,  which,  of  course,  has  had 
the  effect  upon  the  road  of  decreasing  the  revenue  from  $21,000  to 
$17,000.  The  interest  on  those  bonds  is  $21,000  per  year,  and  taxes 
$3,000.  The  operating  expenses  amount  to  $63,000.  It  expends  annu- 
ally in  construction,  improvement,  etc.,  the  sum  of  $3,000,  so  that  for 
the  past  ye*r  or  two  the  profits  of  the  road,  that  is  to  say  after  taking 
out  all  the  expenses,  amount  to  less  than  $500  per  annum.  Its  net 
income  has  been  less  than  $500  for  several  years. 

Eael:  That  is,  per  annum?     A.  Yes,  sir;  per  annum. 

Now,  as  I  said  before,  this  road  is  placed,  not  in  the  same  class  with 
the  longer  roads,  yet  the  margin  is  so  small  that  any  increase  whatever 
will  cause  it  to  be  placed  in  that  category,  and  subject  to  the  provisions 
as  herein  set  forth.  We  feel  we  are  like  the  man  who  has  a  cord  around 
his  neck,  who,  when  asked  if  it  is  pretty  tight,  says:  "  I  can  stand  that." 
"  Do  you  think  you  can  stand  another  knot?"  "  No,  I  am  afraid  it  Avill 
choke."  The  effect  of  the  existence  of  that  amendment  to  the  Constitu- 
tion will  necessarily  be— I  don't  think  I  need  dwell  particularly  upon 


—  32  — 

that  fact  to  you— would  necessarily  be  to  pull  that  rope.  Our  present 
rate  for  both  freights  and  fares  is  high,  as  compared  with  other'  roads^ 
but  not  high  as  compared  with  the  income  of  the  road  and  the  expenses 
of  running  the  same.     A  franchise  granted  in  1874  called  for  this: 

"It  shall  be  lawful  for  the  parties  aforesaid,  and  their  assips,  to- 
charge  and  receive  a  sum  not  to  exceed  10  cents  per  mile  for  each  pas- 
senger, and  20  cents  per  mile  for  each  ton  of  freight  per  mile,  transported 
on  said  road." 

It  also  contains: 

"If  it  shall  appear  upon  the  annual  statements  made  by  the  road  that 
the  net  revenue  arising  from  the  earnings  exceeds  12  per  cent  per 
annum,  it  shall  be  proper  for  the  Board  of  Supervisors  to  adjust  the- 
fares  and  freights,  and  fix  such  rates  as  will  realize  a  net  revenue  equal 
to  but  not  to  exceed  12  per  cent  per  annum." 

In  order  to  exist  it  has  got  to  charge  the  maximum  rates,  and  a 
decrease  in  any  of  those  rates  would  render  the  road  bankrupt;  because, 
running  as  it  exists  to-day,  why  it  is  just  barely  able  to  live,  and  the 
effect  of  this  proposed  amendment  to  the  Constitution  would  be  to  practi- 
cally bankrupt  the  road — wipe  it  out  of  existence.  As  I  said  before,  it 
seems  to  be  a  very  strange  state  of  affairs,  that  an  amendment  to  the 
Constitution  should  have  the  effect  that  a  small  increase  of  traffic  to  the 
road  would  place  it  under  the  influence  of  such  an  iron  rule  as  would 
practically  destroy  its  existence.  Now,  I  don't  know  much  about  rail- 
roads or  about  the  minutiae  concerning  the  running  of  this  road  or  any 
other  road.  The  President  of  the  road  is  here;  also  the  Secretary,  with 
all  the  official  papers  and  all  the  data,  who  will  explain  to  the  com- 
mittee, if  necessary,  under  oath,  to  bear  out  the  statements  I  have  thus 
given  to  you  in  brief.  I  have  here  a  little  bit  fuller  report  of  the  road 
and  its  income  for  the  year  1890.  The  gross  earnings  for  that  year  were 
$87,259;  operating  expenses,  $74,049;  construction  expenses  for  that 
year,  $1,494;  interest  on  bonded  debt,  $20,601  47;  interest  on  floating^ 
debt,  $311;  total,  $96,455  47. 

The  par  value  of  the  stock  is  $100  per  share,  and  it  is  at  present 
quoted  in  the  market,  where  you  can  get  anybody  to  buy  it,  at  $10  per 
share;  so  the  road,  as  it  exists  to-day,  is  not  a  source  of  profit  to  it& 
stockholders,  but  it  is  a  source  of  vast  convenience  to  us,  living  way  out 
in  the  backwoods,  and  its  destruction  or  bankruptcy  would  be  regarded 
as  a  calamity  in  many  a  home.  I  want  to  say,  with  your  permission,  a 
few  words  in  relation  to  the  general  principles  of  that  proposed  amend- 
ment to  the  Constitution.  From  what  the  Chairman  has  already  said, 
I  know  that  you,  Mr.  Chairman,  and  no  doubt  the  rest  of  the  committee, 
are  entirely  familiar  with  the  more  recent  decisions  of  the  Supreme 
Court  of  the  United  States  in  relation  to  matters  of  this  kind,  notably 
that  one  which  is  contained  in  the  lo4th  U.  S.,  wherein  .lustice  Lamar — 
who  has  just  died — filed  a  dissenting  opinion,  claiming  that  the  Supreme 
Court,  or  a  majority  of  that  body,  had  almost  entirely  destroyed  the 
effect  of  the  Granger  cases,  as  well  as  that  of  other  similar  cases.  I  do 
not  know  but  that  .Justice  Lamar,  who  was  a  most  profound  constitu- 
tional lawer,  was  about  right,  that  effect  of  the  so-called  Granger  cases, 
and  other  cases  of  the  same  character,  in  which  it  was  held  and  main- 
tained that  a  State  had  almost  absolute  right  and  control  of  corpora- 
tions, and  to  fix  fares  and  freights,  was  so  modified  that  the  force  of  those 
decisions  had  been  knocked  out  of  them. 


I  will  read  a  little  bit  from  some  portions  of  it: 

In  134th  United  States,  in  the  case  of  Chicago,  Milwaulee,  and  St. 
Paul  Railway  Company  vs.  Minnesota: 

_  In  fixing  fares  and  freights,  the  Legislature  declared  in  the  organiza- 
tion of  the  Railroad  Commission  that  they  should  have  absolute  right, 
and  that  the  fairness  of  those  fares  and  freights  fixed  by  the  Commis- 
sion should  be  conclusively  presumed,  was  not  to  be  attacked  or  capable 
of  being  attacked  in  any  Court;  in  other  words,  they  wanted  to  shut  out 
the  Commission  from  any  judicial  investigation,  and  the  Court  says,  in 
reviewing  a  number  of  cases,  page  455: 

"In  Stone  vs.  FarmeA''  Loan  and  Trust  Company,  116  U.  S.  307,  325, 
the  whole  subject  is  fully  considered.  The  authorities  are  cited  and  the 
conclusion  is  arrived  at,  that  the  right  of  a  State  reasonably  to  limit 
the  amount  of  charges  by  a  railroad  company  for  the  transportation  of 
persons  and  property  within  its  jurisdiction  cannot  be  granted  away  by 
its  Legislature,  unless  by  words  of  positive  grant  or  words  equivalent 
in  law;  and  that  a  statute  which  grants  to  a  railroad  company  the  right 
'from  time  to  time  to  fix,  regulate,  and  receive,  and  tolls  and  charges  by 
them  to  be  received  for  transportation,'  does  not  deprive  the  State  of  its 
power,  within  the  limits  of  its  general  authority  as  controlled  by  the 
Constitution  of  the  United  States,  to  act  upon  the  reasonableness  of  the 
tolls  and  charges  so  fixed  and  regulated.  But  after  reaching  this  con- 
clusion, the  Court  said  (page  331):  'From  what  has  thus  far  been  said, 
it  is  not  to  be  inferred  that  this  power  of  limitation  or  regulation  is  itself 
without  limit.  This  power  to  regulate  is  not  a  power  to  destroy,  and 
limitation  is  not  the  equivalent  of  confiscation.  Under  pretense  of  reg- 
ulating fares  and  freights,  the  State  cannot  require  a  railroad  corporation 
to  carry  persons  or  property  without  reward;  neither  can  it  do  that 
which  in  law  amounts  to  a  taking  of  private  property  for  public  use 
without  just  compensation,  or  without  due  process  of  law.'  There  being, 
therefore,  no  contract  or  chartered  right  in  the  railroad  company  which 
can  prevent  the  Legislature  from  regulating  in  some  form  the  charges 
of  the  company  for  transportation,  the  question  is  whether  the  form 
adopted  in  the  present  case  is  valid." 

It  says,  "  This  power  to  regulate  is  not  a  power  to  destroy,"  and  it 
would  amount  to  destruction  to  this  little  road. 

Gesp^ord:  If  I  understood  you,  your  road  does  not  pay  $4,000  per 
mile,  does  it?  A.  I  say  it  is  on  the  margin;  it  is  so  close  to  the  mar- 
gin that  the  effect  of  any  improvement — if  there  was  any  improve- 
ment— the  effect  of  it  would  be  to  place  it  in  that  class. 

Gesford:  Do  you  charge  10  cents  per  mile?     A.  Yes,  sir. 

Sea  well:  Well,  you  could  not  get  along  then  at  three  and  haul  the 
traffic?     A.  Not  for  a  great  distance,  sir. 

Earl:  You  were  quoting  from  Justice  Lamar's  opinion  there;  you 
were,  were  you  not,  and  concurred  in  by  the  Court?  A.  Yes,  sir.  I 
will  now  read  from  the  "American  Encyclopedia  of  Law,"  page  914: 

"  Charter  Provisions  Relating  to  Freight  as  Contracts. 

"Where  a  carrier's  charter  contains  a  provision  that  the  company 
may  establish   such   rates  of  fare  and  freight,  or  such  rates  as  do  not 
exceed  a  certain  maximum,  the  question  arises:  '  Does  the  grant  of  such 
3 


—  34  — 

a  privilege  constitute  a  contract,  leaving  to  the  carrier  the  adjustment 
of  charges  unrestrained  by  other  limitations  than  that  they  shall  be 
either  reasonable  or  within  the  maximum?  '  Although  there  has  been 
some  conflict  of  opinion,  the  question  must  be  answered  in  the  negative. 
The  common  law  rule  that  the  carrier's  charges  shall  be  reasonable, 
would  in  any  event  be  read  into  a  charter.  The  grant  of  a  right  to  fix 
reasonable  charges  does  not  carry  with  it  the  power  to  declare  what 
shall  be  deemed  reasonable;  such  a  privilege  belongs  to  that  class  of 
powers  the  grant  of  which  can  only  be  made  in  express  terms,  every 
presumption  being  against  it.  (Case  of  Buggies  vs.  Illinois,  108  U.  S., 
page  526.) 

Buggies  vs.  Illinois,  108  U.  S.  526:  "An  amendment  was  made  to  the 
charter  of  a  railroad  company  in  Illinois,  'providing  that  the  said  com- 
pany shall  have  power  to  make,  ordain,  and  establish  all  such  by-laws, 
rules,  and  regulations  as  may  be  deemed  expedient  and  necessary  to 
fulfill  the  purposes,  and  carry  into  effect  the  provisions  of  this  Act,  and 
for  the  well  ordering,  regulating,  and  securing  the  affairs,  business,  and 
interest  of  the  company;  provided,  that  the  same  be  not  repugnant  to 
the  Constitution  and  laws  of  the  United  States,  or  repugnant  to  this 
Act,  the  Board  of  Directors  shall  have  power  to  establish  such  rates  of 
toll  for  the  conveyance  of  persons  or  property  upon  the  same,  as  they 
shall  from  time  to  time  by  their  by-laws  determine,  and  to  levy  and 
collect  the  same  for  the  use  of  the  same  company.'  Held,  That  inasmuch 
as  the  power  to  establish  rates  was  to  be  exercised  through  bv-laws,  and 
the  power  to  make  by-laws  was  restricted  to  such  as  should  not  be  re- 
pugnant (among  other  things)  to  the  laws  of  the  State,  the  amendment 
did  not  release  the  company  from  restrictions  for  the  amount  of  rates 
contained  in  general  and  special  statutes  of  the  State. 

"  The  Court  observes  that  there  is  nothing  which  even  in  the  remotest 
degree  indicates  that  a  by-law  fixing  rates  is  to  be  of  a  diflferent  charac- 
ter from  those  regulating  the  other  business  of  the  company.  When, 
therefore,  in  a  section  of  the  charter  which  expressly  declares  that  no 
by-law  shall  be  made  that  is  in  conflict  with  the  laws  of  the  State,  we 
find  that  the  rates  of  charge  to  be  levied  and  collected  for  the  convey- 
ance of  persons  and  property  are  to  be  regulated  by  by-laws,  the  con- 
clusion is  irresistible  that  only  such  charges  can  be  collected  as  are 
allowed  by  the  laws  of  the  State.  This  implies  that  in  the  absence  of 
direct  legislation  on  the  subject,  the  power  of  the  Directors  over  the 
rates  is  subject  only  to  the  common  law  limitation  of  reasonableness; 
or,  in  the  absence  of  the  statute  or  other  appropriate  indications  of  the 
legislative  will,  the  common  law  forms  part  of  the  laws  of  the  State,  to 
which  the  corporate  by-laws  must  conform.  But  since,  in  the  absence  of 
some  restraining  contract,  the  State  may  establish  a  maximum  of  rates 
to  be  charged  by  railroad  companies  for  the  transportation  of  persons 
and  property,  it  follows  that  when  the  maximum  is  so  established,  the 
rates  fixed  by  the  Directors  must  conform  to  its  requirements;  other- 
wise, by-laws  would  be  repugnant  to  the  laws." 

Chief  .Justice  Waite,  in  deciding  one  of  the  cases,  has  stated: 

"Under  pretense  of  regulating  fares  and  freights,  the  State  cannot 
require  a  railroad  corporation  to  carry  persons  or  property  without 
reward;  neither  can  it  do  that  which,  in  law,  amounts  to  the"^  taking  of 
private  property  for  public  use  without  just  compensation,  or  without 
due  process  of  law.     What  eflect  this  would  have  we  need  not  now  say." 


oO 


If  it  was  evident  from  the  franchise  that  the  State  "did  not  desire,  or 
decli^ne,  or  was  unwilling,"  from  which  it  could  be  clearly  inferred  that 
the  State  did  not  desire,  or  had  surrendered  its  right  to  control  the  fares 
and  freights  of  corporations,  then,  as  a  matter  of  fact,  such  result  can 
be  obtained,  I  take  it  for  granted,  from  reading  the  franchise  in  this 
case,  Mr.  Chairman — the  franchise  granted  to  the  Nevada  County  Nar- 
row Gauge  Railroad.  There  is  a  fixed  maximum  stated  in  all  the 
Granger  cases,  and  language  of  this  character  was  used: 

"The  Board  of  Trustees,  etc.,  of  the  corporation  shall  have  full  right 
to  fix  such  charges  which  to  them  may  seem  reasonable,"  using  that 
word. 

Under  that  provision,  and  similar  language,  it  was  held  that  the  State 
could  not  be  said,  by  the  exercise  of  that  franchise,  to  have  abandoned 
their  right  to  interpose  and  fix  Avhat  those  reasonable  rates  were. 

Under  the  charter  granted  to  this  little  road,  the  language  occurs 
Avhich,  I  think,  complies  with  what  Chief  Justice  Waite  has  said,  and 
must  be  fair.  The  State,  in  granting  this  franchise,  had  surrendered 
the  right  to  control  fares  and  freight  by  the  language  of  the  franchise  of 
this  little  road. 

This  road  is  allowed  to  charge  20  cents  per  ton  per  mile.  I  claim  that 
is  a  contract.  I  know  it  is  regarded  as  a  chestnut  to  say  that  a  fran- 
chise can  bind  the  State.  I  say  it  is  regarded  as  a  chestnut  to  say  that 
there  can  be  anything  like  a  contract  between  the  State  and  a  corpora- 
tion by  their  franchise.  I  claim  any  one  who  will  carefully  read  the 
recent  decisions  of  the  Supreme  Court  of  the  United  States,  in  connec- 
tion with  the  Granger  cases,  and  other  similar  cases,  will  see  that  it  has 
been  held  fairly  that,  where  the  language  of  a  franchise  is  such  as  shows 
that  the  State  intended  thereb}'  to  abandon  its  right  to  fix  fares  and 
freights,  it  amounts  to  a  contract;  that  in  this  sense,  in  the  case  here  at 
bar,  in  the  case  of  the  franchise  of  the  Nevada  County  Narrow  Gauge 
Railroad,  our  franchise  is  set  above  the  amendment  of  the  State  by  its 
Legislature  or  Constitution,  See  the  eff'ect  of  putting  into  a  Constitu- 
tion an  amendment  of  the  character  proposed  here.  Here  you  have  a 
Constitution  which  attempts  to  fix  the  fares  and  freights;  somebody 
objects  to  it;  it  finds  its  way  into  the  Court.  Well,  the  Court  decides 
that  they  are  unfair,  unreasonable;  and  the  people  of  the  State,  the 
authorities,  and  the  Constitution  must  succumb  to  that  decision,  and 
there  is  one  hole  knocked  in  the  Constitution.  Another  railroad  com- 
pany takes  up  the  question  at  a  subsequent  time,  and  the  Court  declares 
in  this  case  the  rates  are  unreasonable  and  unfair.  It  gets  into  Court 
and  gets  a  judicial  determination.  There  is  another  hole  knocked  in 
the  Constitution.  And  so  on,  one  railroad  company  after  another 
makes  successful  attacks  upon  that  provision  of  the  Constitution  until 
you  have  a  State  Constitution,  or  at  least  a  provision  in  it,  as  full  of 
holes  as  a  milk  strainer.  And  the  result  of  it  is  that  you  do  not  know 
where  you  are  standing.  I  claim  such  a  Constitution  of  that  kind 
would  be  a  disgrace  to  the  State,  and  I  stand  upon  that  assertion. 

I  refer  you  to  case  of  Munn  vs.  Illinois,  94  U.  S.,  page  113,  and  to 
other  cases. 

Railroad  companies  are  carriers  for  hire.  They  are  incorporated  as 
such  and  given  extraordinary  powers  in  order  that  they  may  the  better 
serve  the  people  in  that  capacity.  They  are,  therefore,  engaged  in  a 
public  employment  affecting  the  public  interest.     And  in  the  decision 


—  36  — 

of  Munn  vs.  Illinois,  page  113,  subject  to  legislative  control  as  to  their 
rates  of  fare  and  freight,  unless  protected  by  their  charters. 

So  far  as  the  Nevada  County  Narrow  Gauge  Raih-oad  is  concerned, 
the  State  has  absolutely  stated  that  they  may  fix  the  charge  at  20 
cents  per  ton  per  mile,  whether  reasonable  or  not.  No  such  provision 
is  in  the  Granger  cases  which  permits  the  State  afterwards  to  intervene 
and  take  a  hand.  If  there  had  been  any  intention  of  that  kind  in  our 
case,  it  would  have  been  easy  to  have  said  so.  I  can  say  conclusively 
that  there  was  no  such  intention.  Now,  there  is  a  number  of  authori- 
ties here  I  intended  to  quote,  but  which  the  lateness  of  the  hour  pre- 
vents ray  doing.  I  claim,  so  far  as  this  railroad  is  concerned,  under 
its  franchise,  no  one  can  say  what  rates  it  shall  charge,  or  what  it  should 
receive.  I  say  it  is  unfair  to  have  the  people  of  this  State,  either  by 
Legislature  or  any  provision  in  this  Constitution,  interfere  with  the 
fares  and  freights  of  that  railroad.  I  will  say  that  we  insist  as  a  rule, 
which  applies  to  all  railroads,  which  I  suppose  will  go  without  saying, 
or  at  least  among  lawyers,  as  the  reason  the  State  has  no  right  to 
impose  any  unreasonable  fares  and  freights,  if  any  commission  or  State 
undertakes  to  do  so,  that  the  remedy  may  be  obtained  by  judicial  pro- 
ceedings. 

Seawell:  Don't  you  think  the  corporate  State  provision  of  the  Con- 
stitution would  affect  all  franchises  hereafter  granted;  would  it  not? 
Would  it  affect  railroads  the  language  of  whose  franchises  do  not  fix 
maximum  rates?  A.  It  would  affect  railroads  where  similar  language 
is  used  as  passed  upon  in  the  Court  in  the  case  of  Munn  vs.  Chicago, 
where  reasonable  rates  were  left  to  be  fixed  subsequently. 

Seawell:  Well,  you  say  the  State  has  no  right  to  interfere  with  you; 
that  your  franchise  is  above  the  State?  A.  Well,  a  party  may  set  up 
as  many  defenses  as  he  wants,  whether  he  has  any  or  not. 

Q.  I  do  not  see  that  even  if  it  was  incorporated  in  the  Constitution, 
according  to  your  idea,  this  would  affect  you.  I  do  not  see  that  you 
are  interested  in  any  way,  are  you?  A.  I  contend  we  should  not  be. 
The  Attorney-General  may  not  think  so  by  and  by.  The  Attorney- 
General  of  the  State  may  see  fit  to  put  us  to  a  vast  amount  of  expense. 
We  may  have  to  go  to  the  Supreme  Court  of  the  United  States.  We 
may  have  to  go  through  the  Supreme  Court  of  the  United  States  to 
have  our  rights  sustained;  we  cannot  afford  to  let  the  matter  rest. 

In  relation  to  the  general  question,  the  gentleman  here  who  sup- 
ported this  proposed  amendment,  from  Napa,  has  asked  whether  or  not 
this  bill  is  constitutional.  As  I  have  already  stated,  and  I  think  he 
will  agree  with  me  in  stating,  this  bill  is  a  clumsy  affair,  to  say  the 
least.  It  is  a  very  clumsy  thing  to  incorporate  into  a  Constitution,  It 
is  very  clumsy  to  incorporate  some  matter  which  has  to  be  explained 
by  referring  to  private  records;  to  the  records  of  a  traffic  association, 
which  are  only  private  records.  It  would  appear  to  be  a  very  absurd 
matter  to  place  in  the  Constitution — to  place  in  the  Constitution  a 
thing  which  must  be  explained  by  referring  to  the  private  books  of 
some  banker  or  some  mercantile  corporation.  I  say  it  has  no  precedent 
to  put  a  matter  into  the  Constitution  of  that  kind,' the  force  and  effect 
of  which  must  be  discovered  by  rummaging  into  the  private  books  of 
some  association.  Now,  as  to  the  effect— as  to  whether  it  is  constitu- 
tional, or  not.  As  I  have  already  stated,  it  is  constitutional,  and  it  is 
not  constitutional.     It  affects  to   give  control  by  this  bill  to  fix  the 


—  37  — 

matter  of  fares  and  freights  without  any  regard  to  the  reasonableness 
of  the  same.  It  provides  for  no  records  whatever,  and  any  judicial 
tribunal  will  discover  it  to  be  arbitrary — for  the  people  can  be  arbi- 
trary, too,  just  as  well  as  the  Commission  can  be  arbitrary.  The  history 
of  the  world  shows  that  from  the  earliest  times  up  to  the  present,  the 
people  frequently,  not  only  in  moments  of  frenzy,  as  was  illustrated  in 
the  events  of  the  French  Revolution,  but  also  in  their  calmer  moments 
can  be  unjust. 

I  claim  where  provision  is  inserted  in  the  Constitution,  which  pro- 
vides for  bad  judicial  metbods,  upon  which  the  fairness  or  unfairness  of 
the  plan  therein  set  forth  can  be  determined  by  test,  it  seems  to  be 
otherwise  than  feasible. 

One  word  more  I  will  say  in  conclusion.  There  is  a  decision,  Mr. 
Chairman,  you  will  find  here  in  this  volume  of  American  and  English 
Enc3'clop8edia,  wherein  it  is  held  that  it  is  no  excuse  for  unfairness  for 
a  schedule  compelling  a  railroad  to  carry  freight  and  passengers  over  a 
certain  point  at  a  loss,  to  say  that  they  can  make  it  up  because  the  bal- 
ance of  the  road  would  pay.  There  is  a  decision  here,  from  the  Supreme 
Court  of  the  United  States,  in  reference  to  that,  the  substance  of  which 
is.  that  in  order  that  fares  and  freights  should  be  reasonable,  the  amount 
fixed  for  charges  between  any  two  points  should  be  reasonable,  regard- 
ing those  two  points  as  a  link  between  two  other  portions  of  the  road. 

Now,  there  is  a  portion  of  the  road  which  we  have  to  travel  over  to 
get  up  to  the  mountains;  we  have  to  pass  from  Rocklin  to  Colfax,  and 
from  Colfax  still  further  to  Truckee  and  the  State  line,  over  a  portion  of 
the  Central  Pacific  road.  I  am  not  here  as  the  attorney  of  the  Central 
Pacific  road,  at  the  same  time  it  is  important  to  us  as  a  connection 
between  that  portion  of  the  mountains  and  the  valley.  I  claim  and 
know  well  enough  from  the  traffic  that  goes  over  that  portion  of  the 
road,  and  the  running  expenses  of  it,  there  must  be  a  very  small 
amount  of  profit  in  that  portion  of  the  road — for  that  portion  of  the 
Central  Pacific.  The  profits  of  that  portion  of  the  road  must  be  exceed- 
ingly small,  as  I  know  well  enough  from  the  traffic,  which  is  very 
small.  I  claim,  so  far  as  those  mountain  portions  of  the  road  are  con- 
cerned, that  it  is  inequitable  and  unfair,  under  the  Supreme  Court 
decisions  of  the  United  States,  to  compel  them  to  carry  freight  and  pas- 
sengers over  that  portion  of  the  road  at  the  same  rates  as  over  the  val- 
ley portion,  because  it  is  a  very  expensive  portion  of  the  road,  the 
operating  expense  being  much  larger  than  the  balance  of  the  road.  I 
think  that  is  an  important  matter  and  a  matter  that  cannot  be  over- 
looked. 

Earl:  Do  you  think  this  State  regulates  a  rate  on  any  through  freight? 
Would  it  be  Avithin  the  powers  of  the  State  to  do  that?  A.  No,  sfr;  I 
claim  that  it  would  not.  My  idea  is,  this  applies  to  rates  of  freight 
between  any  two  stations  within  the  State;  that  the  rates  must  be  fair 
and  reasonable  as  between  those  two  stations,  regardless  of  the  fact  that 
the  balance  of  the  road  pays;  therefore,  I  do  not  think  that  you  can 
start  right  in,  and  provide  fares  and  freights  by  the  constitutional 
amendment  proposed  here,  or  by  anything  of  the  kind.  I  will  say,  as  a 
citizen,  that  the  only  trouble  I  can  see  with  the  present  Railroad  Com- 
mission is,  they  are  too  lazy;  they  do  not  earn  their  salary,  sometimes. 
In  some  States,  there  is  a  Commission  appointed  by  the  Governor,  which 
is  removable  at  the  pleasure  of  the  Executive.     Perhaps  the  best  thing 


—  38  — 

that  could  be  done  with  the  present  Commission  would  be  to  provide  for 
a  Commission  of  that  kind. 

In  New  York,  Delaware,  and  elsewhere,  the}'  have  found  the  safest 
method  for  the  people  is  to  have  a  strong  Executive,  and  to  allow  the 
Executive  of  the  State  or  the  Mayor  of  the  city  to  have  a  large  exercise 
of  power  in  appointments.  I  do  not  know  whether  the  people  of  Cali- 
fornia are  ready  for  such  an  idea  as  that  or  not;  but  I,_for  one,  believe 
in  that  doctrine,  though  it  may  seem  to  be  undemocratic  and  unrepub- 
lican,  but  the  history  of  each  of  the  States,  and  the  history  of  political 
government  of  this  country,  goes  to  show  a  prompt  and  better  adminis- 
tration is  frequently  obtained  by  extending  the  power  of  the  Executive 
in  the  matter  of  appointments,  etc.,  giving  him  unreserved  power  of 
appointment. 

Earl:  The  receipts  of  your  road  have  fallen  off  the  past  years,  have 
they  not?  A.  In  ISSO,  the  receipts  were  $115,000.  Those  were  boom 
times  of  hydraulic  mining.     Now  they  are  $88,000. 

Q.  Then  there  is  hardly  any  probability  of  striking  the  limit  named 
in  the  amendment?     A.  It  may,  sir;  it  is  now  $3,900. 

Seawell:  It  would  strike  the  10  cent  rate  pretty  hard,  then. 

Burrows:  The  indications  are  business  will  revive,  and  it  will  strike 
the  $4,000  limit. 

Earl:  If  there  is  any  scheme  revived?  A.  If  hydraulic  mining  is 
revived,  within  five  vears  thereafter  the  receipts  would  run  up  from 
$88,000  to  within  $100,000,  and  be  then  above  the  $4,000  limit.  We  do 
not  want  to  have  this  shadow  resting  on  us  all  the  time.  It  is  not  fair 
to  start  right  in  under  a  shadow  such  as  this  one.  When  you  attempt 
to  increase  the  business,  if  you  attempt  to  develop  your  trade  or  improve, 
the  effect  will  be  hari-kari  suicide.  We  have  great  hopes  of  our  indus- 
tries; there  are  thousands  of  fruit  trees  which  have  been  planted  out  on 
the  hillsides  which  are  not  yet  in  bearing,  but  from  which  the  road 
expects  great  results  by  and  by.  Within  two  or  three  years  we  expect 
a  large  product  from  those  trees.  I  will  say  then,  further,  we  have  very 
strong  hopes  that  within  a  few  years  our  income  will  be  increased  to  such 
an  extent,  perhaps,  that  we  may  be  able  to  pay  a  dividend,  which  we 
cannot  do  now. 


Thursday  Evening,  January  26,  1893. 

Mr.  Earl:  At  the  point  of  adjournment  last  evening,  the  Nevada 
County  Narrow  Gauge  road  had  concluded  its  argument.  I  don't  know 
whether  Mr.  Kidder  has  anything  further  to  add  to  that  or  not. 

Kidder:  Mr.  Chairman,  I  have  something  further  to  add  to  the 
remarks  of  my  attorney,  but  there  are  several  representatives  here  at 
this  meeting  this  evening  who  wish  to  get  away.  Mr.  Martin  has  a  list 
of  the  roads  in  order  in  which  they  will  appear,  and  I  am  wilHng  to- 
stand  aside  for  the  roads  anxious  to  get  away. 

Earl:  The  Yreka  road;  is  that  represented? 


—  39  — 
Mr.  H.  p.  Gillis. 

Representing  the  Yreka  road,  addressed  the  committee  as  follows: 

Mr.  Chairman,  and  Gentlemen  of  the  Committee — I  have  been  selected 
by  Mr.  Churchill  and  the  other  members  of  our  Board  of  Directors  to 
present  what  little  we  have  to  say  to-night.  I  am  here  to  represent  in 
part  one  of  the  smallest  roads  in  this  State,  one  of  the  shortest  ronds; 
in  the  way  of  wealth  a  poor  one,  probably  the  weakest  road  in  the  State 
of  California.  We  did  not  particularly  desire  to  build  this  road,  Mr. 
Chairman;  it  was  rather  built  under  protest  than  otherwise.  We  were 
so  situated  that  on  coming  up  there  the  Southern  Pacific  Railroad  would 
pass  about  eight  miles  to  the  east  of  us.  Surveys  were  made,  but  after 
several  conferences  with  the  Southern  Pacific  officials  it  was  not  thought 
practicable  to  pass  through  our  town,  and  that  leaves  us  about  eight 
miles  oif  the  line  of  the  main  road.  The  place  where  the  Southern 
Pacific  proposed  to  build  a  depot  was  not  pleasant,  so  the  people  of 
Yreka  got  together  (Yreka  being  a  town  of  between  1,500  and  1,800 
people)  and  concluded  to  make  an  effort  to  build  a  road  themselves, 
calling  on  the  best  of  the  community  to  devote  their  business  capacity 
to  further  the  enterprise,  not  for  the  purpose  of  money  speculation,  but 
to  save  the  homes  of  those  villagers  from  coming  down  about  their  ears, 
to  prevent  the  enterprising  members  of  the  village  from  moving  away  to 
other  places  for  homes.  With  that  end  in  view,  they  selected  as  one  of 
the  Board  of  Directors  one  of  the  attorneys  of  Yreka,  and  the  others 
were  the  best  business  men  of  the  town.  The  company  was  organized 
and  right  of  way  secured,  and  the  road  built,  with  the  assistance  of  the 
townspeople,  who  contributed  about  $50,000  in  cash,  and  going  in  debt 
about  $50,000  more.  The  Board  of  Directors  has  served  from  the  organi- 
zation of  the  corporation  to  the  present  time,  and  notwithstanding  we 
have  had  some  complications,  we  have  never  paid  $250  for  attorney's 
fees  from  that  date  to  this.  The  Board  of  Directors  has  contributed 
its  services,  and  from  the  commencement  it  has  been  a  great  expense  to 
them.  Those  are  the  circumstances  under  which  the  road  was  built. 
None  of  my  people  have  ever  appeared  before  the  Legislature  beibre,  but 
this  bill  compelled  them  to  come  here;  that  if  it  was  passed  it  vould 
cause  our  engine  and  car  houses  to  become  empty  and  deserted  barracks; 
it  would  destroy  the  property,  and  to  a  large  extent  destroy  the  homes 
that  the  property  was  built  to  save,  for  by  the  bill  it  was  found  that  for 
passenger  rates  they  were  allowed  but  2  cents  per  mile,  and  wit]  i  the 
consent  of  the  Legislature,  3  cents,  while  at  the  present  time  they  are 
charging  8  cents.  For  freight  rates  the  bill  would  allow  but  3^,  4,  and 
4^  cents,  while  at  present  they  were  charging  7-|  cents.  And  with  these 
rates  of  charges,  and  this  service  on  the  part  of  the  Directors  and  man- 
agers, the  road  never  paid  a  dollar,  and  they  never  expected  it  would; 
it  was  only  with  the  utmost  effort  they  could  pay  expenses. 

Notwithstanding  my  road  was  not  included  in  the  class  earning 
$4,000  gross  earnings  per  annum,  we  still  object  to  the  bill  as  it  stands 
at  present.  If  the  bill  should  become  a  law,  giving  the  Legislature 
power  to  fix  rates  of  freights  and  fares,  bills  would  be  constantly  coming 
requiring  the  presence  of  some  of  our  Directors  here  all  the  time  to  look 
out  for  their  interests;  there  would  necessarily  be  many  complaints  from 
both  railroads  and  others  in  regard  to  rates;   changes,  alterations,  and 


—  40  — 

modifications  would  constantly  be  requested.  We  are  not  able  to  send  a 
representative  here,  and  keep  watching  the  affair  all  the  time,  to  see 
that  our  interests  are  not  sacrificed.  I  also  object  to  the  bill  because  I 
consider  that  the  bill,  if  it  should  become  part  of  the  fundamental  law, 
would  deal  with  a  subject  of  this  character  as  it  should  not  be  dealt 
with.  The  honorable  Senator  who  introduced  the  bill,  and  whose  name 
is  appended  to  it,  in  speaking  to  the  committee  said  he  would  hesitate  be- 
fore he  would  chance  a  bill  of  this  character,  without  placing  in  that  bill 
a  limit  beyond  which  the  Legislature  could  not  go.  I  ask  that  the 
matter  be  most  carefully  considered;  that  the  members  were  not 
here  as  representatives  of'  the  railroad  companies,  but  of  the  people  of 
the  State  of  California,  whose  sworn  duty  it  was  to  look  out  for  their 
interests.  And  if  the  author  of  the  bill  is  unwilling  to  chance  the  bill 
without  fixing  in  the  constitutional  amendment  a  clause  beyond  which 
they  cannot  go,  I  ask  a  most  careful  consideration  of  the  proposition. 
While  they  cannot  make  them  go  beyond  3  cents  for  hauling  passengers, 
they  iiiay  make  them  haul  for  i  cent.  In  other  words,  there  should  be 
a  saving  clause  for  the  railroad  companies,  as  well  as  for  the  people  of 
the  State.  I  consider  the  cost  of  construction  should  be  taken  into 
account  in  basing  the  rates  for  freights  and  fares,  but  the  bill  merely 
classifies  into  two  classes,  those  earning  gross  over  $4,000  per  annum, 
and  those  earning  less,  making  no  provision  for  the  costly  operations  of 
roads  having  streams  to  cross  which  overflow  in  winter,  others  having 
heavy  mountain  grades,  but  classifying  all  alike,  whether  valley  or  moun- 
tain roads,  taking  only  the  gross  earnings  into  consideration.  I  submit 
for  the  consideration  of  the  committee,  whether  or  not  this  Act  becomes 
a  law,  I  desire  to  say  for  my  own  railroad  company,  that  in  my  humble 
judgment  it  would  be  unfortunate  for  the  railroads  of  the  State,  and 
also  for  the  Legislature  of  the  State,  which  latter  for  years  has  pro- 
fessedly been  trying  to  keep  the  railroads  out  of  politics,  and  now  they 
not  only  invite  but  absolutely  command  the  railroad  companies  within 
the  State  to  come  forward  and  hold  sessions  biennially.  It  w^ould 
inject  the  unhappy  state  of  affairs  in  regard  to  our  political  machin- 
ery of  bringing  back  with  all  the  unfortunate  circumstances  surround- 
ing it  not  only  one  railroad,  but  all  the  fertile  railroads  within  the 
State,  and  necessarily  forcing  and  keeping  them  there.  The  matter 
would  be  better  conducted  by  a  Commission  who  would  fairh^  and  con- 
scientiously perform  their  duties;  better  by  a  Commission  of  three,  five, 
or  smaller  number,  who  have  a  special  knowledge  of  the  subject,  much 
better  than  b}^  one  hundred  and  twenty  men  coming  together  biennially 
and  only  having  sixty  days  to  perform  the  duties.  I  consider,  with 
all  the  complications  thrown  around  the  business  of  freights  and 
fares,  it  is  a  good  deal  more  than  it  could  do  in  sixty  days  so  as  to  stand  • 
the  test  of  two  years  following.  With  my  own  road,  while  the  smallest 
in  the  State,  and  least  complicated  interested  of  all  roads  in  the  State, 
the  Board  of  Directors  meet  every  month.  In  their  monthly  meetings 
they  take  into  consideration,  certainly  every  few  months,  the  rates  and 
fares,  and  there  was  no  time  yet  they  did  not  make  some  alterations, 
modifications,  or  changes  of  the  rates  of  freights  and  fares;  they  were 
absolutely  required  to  make  changes  every  few  months.  How  would  it 
be  possil:)le  for  the  Legislature,  with  all  the  complicated  ramifications  of 
all  these  vast  roads,  to  enter  into  the  duties  and  perform  them  as  well 


—  41  — 

as  they  should  be  done?     The  above  I  respectfully  submit  to  the  con- 
sideration of  the  committee. 

Burke:  What  is  the  length  of  your  road? 

GiLLis:  A  little  short  of  eight  miles. 

Q.  What  is  the  gross  earnings?     A.  Gross  receipts  per  mile,  $1,600. 


Statement  of  D.  A.  Bexder. 

(Representing  the  Carson  and  Colorado  Railroad.) 

Mr.  Chairman:  I  ask  the  indulgence  of  the  committee  in  this:  that 
the  brief  statement  I  Avill  make  was  prepared  before  the  present 
amendment  eliminating  the  short  roads  was  ottered,  and  that  I  have 
not  had  the  time  to  revise  my  statement  accordingly. 

The  Carson  and  Colorado  Railway  Company,  an  incorporation  of  the 
State  of  California,  operates  a  line  of  narrow  gauge  railroad  starting 
from  its  connecting  point  on  the  Virginia  and  Truckee  Railroad,  in  the  ■ 
State  of  Nevada,  to  the  town  of  Keeler,  on  Owens  Lake,  in  Inyo  County, 
California,  a  distance  of  two  hundred  and  ninety-three  miles,  to  which 
point  it  was  built  in  1883 — one  hundred  and  eighty-five  miles  of  the 
line  being  in  Nevada,  and  one  hundred  and  eight  miles  in  California. 

This  railroad  property  was  bonded  at  the  rate  of  $15,000  for  each  mile 
of  road  constructed,  equal  to  $4,380,000  in  bonds  for  the  two  hundred 
and  ninety-three  miles,  same  bearing  6  per  cent  per  annum  interest, 
making  an  interest  charge  to  be  earned  in  addition  to  the  earnings  re- 
quired for  operating  and  taxes,  of  $262,800  per  year. 

The  company  during  the  past  ten  years  has  been  able  to  earn  a  small 
surplus  above  the  amount  required  for  expenses  of  operation  and  taxes, 
but  not  enough  to  make  much  of  an  impression  on  the  amount  neces- 
sary to  meet  the  annual  interest  charge  of  $262,800,  for  it  found  itself 
on  July  1st  last  behind  in  unpaid  interest  coupons  due  to  the  bond- 
holders, something  in  the  neighborhood  of  a  million  and  a  half  of 
dollars. 

The  steadily  increasing  sum  of  unpaid  and  unearned  interest  finally 
became  such  a  "specter"  as  to  call  for  relief,  and  in  August  last  the 
property  was  deeded  to  a  new  incorporation,  under  an  arrangement  with 
the  stockholders  and  bondholders  whereby  they  surrendered  their  bonds 
and  shares  of  stock  in  amount  $4,380,000  each  for  $2,000,000  in  bonds 
bearing  but  4  per  cent  per  annum  interest,  and  running  for  a  period  of 
fifty  years — thus  reducing  the  annual  interest  from  $262,800  to  $80,000, 
a  difi'erence  of  $182,800.  When  this  action  was  taken  it  was  confidently 
expected  that  the  new  company  would  be  able  to  earn  annually  this 
low  interest  charge  of  $80,000  per  year;  less,  by  the  way,  than  2  per  cent 
per  annum  on  the  actual  cost  of  the  property;  but  its  expectations  have 
proved  to  be — from  the  decreased  traffic  enjoyed — again  most  disappoint- 
ing, as  its  earnings  for  the  past  twelve  months,  ending  December  31st 
last,  have  been  but  $45,000  in  excess  of  the  amount  required  and  paid 
for  operating  expenses  and  taxes — but  little  more  than  1  per  cent  per 
annum  interest  on  the  original  cost  of  construction  and  equipment. 

Let  us  now  see  what  this  company  does  for  the  State  and  county  gov- 
-ernments  to  which  it  is  compelled  to  contribute  support  in  the  shape  of 
taxes.     Last  year — 1892 — its  gross  earnings  were  about  $210,000 — but 


—  42  — 

about  $700  per  mile  of  road  operated.  Operating  expenses,  $137,000, 
about  65  per  cent.  Taxes,  $28,028,  or  about  83  per  cent,  altogether,  of 
the  earnings  for  operating  and  taxes.  Here  we  find  13^  per  cent  of  the 
gross  earnings  of  this  railroad  paid  to  the  State  and  county  govern- 
ments of  Nevada  and  California  for  taxes. 

A  passenger  rate  of  2  cents  per  mile  is  proposed  by  the  bill  before  this 
committee,  which,  if  enacted,  would  be  a  reduction  of  about  4  cents  per 
mile,  our  rate  now  being  an  average  of  about  6  cents  per  mile.  The 
reduced  freight  rates  also  proposed  by  this  measure  would  give  us  in 
some  of  the  principal  commodities  we  now  carry  a  rate  of  6  cents  per 
hundred  pounds,  where  we  now  charge  and  receive  25  cents  per  hundred 
pounds.  Now,  it  can  be  readily  understood  that  we  could  not,  under 
such  ridiculously  low  rates,  carry  passengers  and  freight  except  at  a  posi- 
tive loss. 

It  is  proposed  to  place  all  roads  in  the  State  under  the  exactions  of 
this  law,  regardless  of  the  cost  of  construction  and  operating  of  the 
dilferent  roads. 

This-  is  manifestly  unjust,  and  discriminates  with  great  severity 
against  such  lines,  which,  by  reason  of  their  distance  from  tidewater, 
and  their  great  cost  of  construction,  cannot  be  operated  as  cheaply  as 
roads  running  mainly  through  the  level  and  populous  valleys  of  the 
State. 

As  an  illustration:  The  Carson  and  Colorado  Railroad  paid  to  the 
Southern  Pacific  Railroad  Company,  and  the  Virginia  and  Truckee 
Railroad  Company,  its  connection  roads,  in  the  neighborhood  of 
$200,000,  freight  charges  on  the  material,  rails,  ties,  locomotives,  etc., 
used  in  its  construction.  Is  it  not  apparent  that  this  and  other  addi- 
tional cost  items  of  construction  of  its  railroad,  over  other  railroads 
affected  b}^  this  bill,  should  be  considered  in  the  application  of  lower 
freights  and  passenger  rates,  and  that  failure  to  consider  such  items, 
forming  part  of  the  cost  of  construction,  is  discrimination  of  the  most 
pronounced  type? 

Who  calls  for  the  rates  proposed  to  be  put  in  force  on  this  railroad 
line?  Has  any  citizen  or  taxpayer  in  Mono  and  Inyo  Counties,  through 
which  the  road  runs,  appeared  before  this  Legislature,  and  complained 
that  the  rates  of  fare  and  freight  we  charge  and  collect  are  greater  than 
what  is  reasonable?  Has  any  patron  of  the  company  made  known 
anywhere  the  fact  that  he  is  not  satisfied  with  its  prevailing  rates? 
None. 

It  may  be  said  that  the  bill  before  us  affects  only  the  local  traffic  in 
the  State  of  California.  To  this  we  say  that  such  local  traffic  is  an 
important  factor  in  our  revenue,  as  the  line  in  California  through  the 
fertile  Owens  Valley  gives  us  the  best  local  business  we  have  on  the 
entire  line. 

Note. — Average  freight  rate  on  through  and  local  freight  business  for 
year  ending  June  31,  1892,  .0520  per  ton  per  mile.  Average  cost,  not 
including  taxes,  per  ton  per  mile,  .0360. 

Passenger  Traffic. — Average  rate  per  mile  per  passenger,  .0546;  aver- 
age cost  per  mile  per  passenger  is  more  than  what  was  received. 

Since  preparing  the  above  matter,  I  find  that  the  amendment  now 
before  this  committee  does  not  affect  the  Carson  and  Colorado  Railway 
Company  in  its  present  condition.  Notwithstanding,  it  does  aff'ect  it& 
future  prospects. 


—  43  — 

The  builders  of  this  property,  all-  of  whom  are  either  residents  or 
heavy  taxpayers  of  the  State  of  California,  certainly  anticipated,  when 
they  invested  their  own  personal  funds  in  its  construction,  that  its 
earnings  would  reach  !l'4,000  or  more  per  mile.  The  Virginia  and 
Truckee  Railroad,  with  which  it  connects  (and  whose  owners  control 
in  a  measure  the  Carson  and  Colorado),  for  the  year  ending  June  30th 
last,  earned  in  the  neighborhood  of  $10,000  per  mile,  hence  it  could 
have  been  no  stretch  of  the  imagination  to  have  anticipated  that  the  per 
mile  earnings  of  the  Carson  and  Colorado  would  reach,  say  50  per  cent 
of  the  per  mile  earnings  of  the  Virginia  and  Truckee.  And  further,  we 
do  not  now  believe  that  it  will  be  possible  for  the  Carson  and  Colorado 
Company  ever  to  earn  the  sum  per  mile  which  will  place  it  within  the 
restrictions  of  this  proposed  amendment. 

I  have  already  shown  you  that  the  operating  expenses  of  our  com- 
pany for  the  past  twelve  months  reached  83  per  cent  of  its  gross  earn- 
ings, and  it  is  probable  that  this  percentage  would  not  go  much  below  75 
per  cent  (the  bulk  of  our  freight  being  mineral  products,  handled 
at  minimum  rates),  in  the  event  of  our  per  mile  earnings  reaching 
$4,000  per  annum,  which  would  give  us  say  $1,000  per  mile  net  earn- 
ings. Now  I  claim,  Mr.  Chairman,  that  this  sum  would  not  compen- 
sate the  owners  of  the  property  for  their  investment,  as  the  property 
has  been  operated  long  enough  to  require  a  considerable  portion  of  said 
net  earnings  for  depreciation — arising  from  the  wearing  out  of  its  rails 
and  equipment — no  charge  having  ever  been  made  against  such  depre- 
ciation since  commencing  operations  in  1883. 

Hoping,  and  ever  anticipating,  as  we  do,  that  the  future  will  yet  bring 
us  reasonable  returns  for  our  investment,  we  object  to  the  amendment 
before  the  committee  as  "handicapping,"  if  I  may  use  the  word,  our 
efforts  to  secure  and  create  greater  traffic,  knowing  that  if  we  should 
succeed,  our  apparent  success  really  would  result  in  disaster. 

Our  people  have  in  contemplation  the  extension  of  its  line  to  a  con- 
nection with  the  trunk  lines  of  railroad  now  running  and  to  be  run  to 
Southern  California,  whenever  it  appears  to  them  that  such  extension 
would  be  a  good  business  proposition;  but  I  can  assure  this  committee 
that  they  will  not,  in  m}^  judgment,  entertain  the  matter  of  additional 
investment  for  such  extension,  should  the  amendment  proposed  be 
accomplished. 

Thanking  you  for  your  attention,  I  will  be  glad  to  answer  any  ques- 
tions the  committee  desires  to  ask. 

Mr.  Earl:  Is  there  any  one  present  representing  the  Colusa  and  Lake 
Railroad?  • 


Statement  of  Mr.  E.  W.  Jones. 

Mr.  Jones:  We  have  here  this  evening  the  Superintendent  of  our 
railroad,  and  I  rather  expected  he  would  address  the  committee.  It  is 
the  first  instance  on  record  where  his  modesty  overpowered  him.  I  cer- 
tainly thought  he  would  open  the  ball  at  any  rate.  Not  being  an  attor- 
ney, and  our  company  not  being  able  to  afford  the  luxury  of  one,  we 
shall  not  attempt  to  make  any  great  argument,  but  leave  that  entirely 
to  the  gentlemen  on  the  committee.     We  believe  they  are  better  able  to 


—  44  — 

judge  as  to  matters  of  that  sort,  having  several  prominent  attorneys  on 
the  committee. 

I  Avill  proceed  in  as  concise  and  few  words  as  I  can  to  give  you  a  busi- 
ness-like statement  of  the  conditions  of  our  road,  and  leave  you  to  judge 
whether  or  not  we  can  operate  under  the  provisions  of  this  constitutional 
amendment,  as  proposed.  Like  the  gentleman  who  preceded  me,  or 
opened  the  argument  this  evening,  I  might  say  our  road  was  also  built 
more  from  necessity  than  choice,  and  at  least  one  of  the  members  of 
your  committee  is  pVobably  aware  of  that  fact — I  refer  to  Senator  Hart. 
He  probably  is  familiar  with  the  organization  and  construction  of  our 
road. 

In  1885,  the  general  line  of  the  Northern  Railroad  having  been  sur- 
veyed, the  road,  if  built,  would  pass  our  place,  leaving  us  some  ten  miles 
off  the  line  of  the  road,  and  it  became  necessary  that  we  should  have 
railroad  communication  with  the  outside  world.  For  this  reason  we 
organized  a  company  of  business  men  and  farmers  along  the  line  of  our 
road,  each  taking  stock  to  the  extent  of  his  ability.  Many  of  our  stock- 
holders are  men  of  limited  means — not  capitalists — and  not  men  who 
want  to  operate  the  road  at  a  loss,  even  if  they  were  able  to  do  so.  We 
constructed  our  road  at  a  time  when  the  materials  which  enter  into  the 
construction  of  a  road  were  very  cheap.  We  bought  our  rails  at  a  low 
price;  I  believe  we  paid  $35  per  ton  in  New  York.  We  paid  $10  freight 
from  New  York  to  San  Francisco  by  way  of  the  Isthmus,  and  $15  over 
the  Sunset  route — about  as  cheap  freight  as  any  railroad  ever  had  the 
advantage  of.  We  contracted  for  grading,  and  trestle,  and  other  work 
at  the  lowest  possible  prices;  I  believe  the  highest  price  we  paid  for  any 
grading  on  our  road  was  12^  cents  per  cubic  foot,  which  was  certainly 
very  low,  taking  into  consideration  that  on  some  portions  of  the  road 
there  was  considerable  rock  work  and  blasting  to  be  done.  Our  road 
cost  us  in  the  neighborhood  of  $200,000.  It  extends  a  distance  of 
twenty-three  miles.  The  Board  of  Directors  of  that  railroad  have  served 
up  to  this  time  without  one  cent  compensation;  no  officer  has  a  salary, 
with  the  exception  of  the  Superintendent,  who  receives  $1,200,  and  the 
Secretary,  who  receives  $180  per  annum.  We  pay  our  engineers  from 
$60  to  $90  per  month.  Conductors  receive  $60,  and  all  of  our  train  men 
in  the  same  proportion.  I  do  not  think  there  is  a  railroad  in  the  State 
that  is  run  as  economically  as  the  Colusa  and  Lake  Railroad. 

And  yet,  with  all  these  things  in  our  favor,  and  our  road  costing  us 
less  than  $10,000  per  mile,  and  with  its  bonded  indebtedness  of  about 
$3,000  per  mile,  we  have  never  yet  been  able  to  pay  a  cent  in  dividends. 
The  stock  of  the  railroad  to-day,  if  sold  at  all,  would  not  bring  20  cents 
on  the  dollar.  In  fact,  that  was  about  the  price  the  last  stock  was  sold 
at.  At  the  present  time,  and  from  the  time  the  road  has  been  in  opera- 
tion, we  have  been  charging  8  cents  per  mile  for  passengers,  and  from  5 
to  10  cents  per  mile  for  merchandise,  according  to  the  classification,  on 
the  different  classes  of  merchandise  hauled  over  the  road. 

Now,  gentlemen,  if  with  that  sort  of  showing  and  that  cost  of  road 
we  cannot  pay  a  dividend,  and  but  little  more  than  our  operating 
expenses,  I  would  like  to  have  the  committee  tell  me  what  we  are  going 
to  do  if  you  reduce  fares  to  2  cents  and  freight  to  the  basis  proposed  in 
this  constitutional  amendment.  We  would  simply  have  to  lock  up  our 
railroad  and  stop  running,  or  turn  the  road  over  to  the  bondholders  for 
the  $70,000  that  we  owe.     The  net  income  from  the  road,  after  paying 


—  45  — 

interest  on  bonds,  was  $6,500,  and  that  was  the  best  3'ear  we  have  had 
since  the  road  was  running.  This  would  amount  to  a  little  less  than  3-^ 
per  cent  interest  on  the  capital  invested.  Certainly  the  committee  will 
bear  me  out  in  the  assertion  that  this  is  as  reasonable  a  rate  of  profit  aa 
any  rate.  It  has  been  said  that  this  amendment  which  is  proposed — 
the  provision  being  2  or  3  cents  per  mile  to  railroads  earning  more  than 
$4,000  per  mile — would  not  affect  a  road  of  our  standing;  but  as  I  under- 
stand, the  original  bill  is  still  before  this  committee;  it  never  has  been 
withdrawn.  We  are  not  aware  and  do  not  know  what  bill  this  com- 
mittee will  report,  and  it  is  proper  and  in  order  for  us  to  argue  on  that 
basis.     It  is  liable  to  fix  rates  at  2  cents  per  mile. 

Gesford:  With  the  permission  of  the  gentleman — the  idea  was,  if  it 
was  not  stated  in  specific  terms,  to  consider  the  other  bill  as  withdrawn; 
this  was  proposed  as  a  substitute  for  that  bill,  or  that  resolution.  The 
proposed  substitute  would  provide  for  3  cents  instead  of  2  cents;  this 
bill  is  proposed  in  lieu  of  that  bill.  That  is  the  idea,  that  the  other 
bill  is  withdrawn. 

Earl:  I  understand  the  Senate  has  referred  to  this  committee  the 
consideration  of  original  Bill  No.  8,  called  "Constitutional  Amendment 
Bill  No.  8;'^  that  at  the  hearing  Monday  night,  you  also,  at  that  time, 
prepared  what  you  designated  as  "Committee  Substitute."  In  case  we 
desire  to  act  favorabl}^  on  a  bill  that  we  can  refer  that  one  back,  if  we 
see  fit  to  adopt.  It  may  be  the  desire  of  the  committee  to  report  back 
the  original. 

Gesford:  Yes,  but  I  understand  the  committee  have  reported  back 
the  substitute  to  the  Senate;  so  it  was  passed  to  print  and  referred  to 
the  committee. *^ 

Earl:  Yes,  but  the  original. 

Geskokd:  But  the  proponents  of  this  bill,  do  not  insist  on  the  original 
bill,  but  of  course  the  committee  have  that  within  their  discretion. 
The  proponents,  however,  do  not  insist  on  the  original  bill  as  proposed 
at  all. 

Jones:  Even  with  that  understanding  of  the  bill,  the  railroad  at 
the  present  time  might  possibly  be  enumerated  under  the  2  or  3  cent 
provision.  But  it  is  not  the  intention  of  the  incorporators  and  the 
gentlemen  who  are  operating  our  railroad  to  let  it  stand  where  it  now 
is.  There  is  a  large  amount  of  business  we  are  reaching  out  for  in  the 
valleys  and  timber  lands,  and  we  hope  to  bring  in  settlers.  Add  to 
this,  the  fact  that  our  own  town  of  Colusa,  has  planted  something  like 
five  thousand  acres  of  orchard — those  trees  are  just  beginning  to  bear, 
and  of  course  we  expect  to  receive  a  large  amount  of  traffic  from  that. 

Earl:  Your  gross  earnings  are  how  much? 

Jones:  $1,200  per  mile.  Add  to  this  the  extension  of  our  road,  which 
we  are  liable  to  make  at  any  time,  and  the  constant  development  of 
the  country  along  our  line,  and  you  can  very  readily  see  we  might 
before  very  long  come  in  that  class,  and  probably  be  in  that  same  situ- 
ation that  the  Nevada  County  Narrow  Gauge  is;  in  other  words,  if  we 
increase  our  traffic,  we  get  less  revenue.  I  believe  that  the  Constitution 
of  the  United  States  guarantees  to  every  citizen  life,  liberty,  and  the 
pursuit  of  happiness.  Now  so  far  as  life  and  liberty  are  concerned,  it 
might  be  that  a  corporation,  after  a  constitutional  amendment  like  that 
under  consideration  became  a  law,  might  still  live;  but  if  any  one  thinks 
he  will  have  any  happiness  in  running  a  railroad  at  2  or  3  cents  a  mile, 


—  46  — 

he  had  just  better  get  in  and  try  it;  I  think  he  will  find  he  is  sadly 
mistaken.  I  presume  our  road  may  be  one  that  Mr.  Leeds  characterizes 
as  a  "  bad  investment."  We  might  have  made  a  bad  investment;  but 
if  we  made  a  bad  investment  we  don't  want  it  all  taken  away  from  us. 
We  are  fighting  for  our  lives. 

If  there  are  any  questions  your  committee  would  like  to  ask  and  wish 
answered,  I  shall  be  pleased  to  do  so. 


Statement  of  J.  M.  Fulton. 

(Representing  the  Nevada-California-Oregon  Railway.) 

Mr.  Fulton:  I  represent  the  Nevada-California-Oregon  road,  an  asso- 
ciation of  individuals  of  which  Mr.  E.  Gest  is  Custodian  and  Manager. 
We  hear  a  good  deal  about  the  "dear  people,"  and  people  working  for 
the  "dear  people,"  but  I  think  I  can  give  the  committee  a  little  illus- 
tration of  what  this  is,  in  fact.  In  1884,  the  proposition  was  looked 
over  by  the  firm  that  now  own  the  Nevada-California-Oregon  Railway, 
as  to  building  into  Lassen  County,  and  Modoc  County,  and  Lake  County, 
Oregon.  They  were  without  means  or  any  way  to  market  anything  that 
could  be  produced  in  a  good  agricultural  and  stock-raising  country. 
The  laws  of  the  Htate  of  California  were  looked  into  as  regards  the 
maximum  rates  permitted  to  be  charged  for  freights  and  fares.  The 
situation  was  taken  in  as  any  good  business  man  would  naturally  look 
it  over,  and  our  people  outside  of  the  State,  doing  business  in  the  State 
of  New  York,  concluded  to  make  an  investment  and  build  a  railroad  in 
the  State  of  California,  starting  from  Reno,  Nevada,  and  traveling  in  a 
northwesterly  direction  to  the  Nevada  State  line;  going  thence  about 
four  miles  to  the  summit  of  the  Sierra  Nevada  Mountains  at  Beckwith 
Pass,  and  northerly  fifty-two  miles  in  the  State  of  California  into  Honey 
Lake  Valley,  to  a  point  known  as  Amadee.  The  actual  amount  of  in- 
vestment in  the  construction  of  the  road  to  this  stage  exceeds  $1,000,000. 
There  is  no  stock  or  bonds.  The  road  does  not  owe  a  dollar.  It  is  not 
incorporated.  The  expenditure  to  this  date,  as  I  said  before,  exceeds 
$1,000,000.  The  road  has  never  paid  its  owners  a  penny.  Our  expend- 
itures for  the  calendar  year  1892,  were  $110,423  10.  Our  income  from 
all  sources  was  $74,463  82.  For  betterments  there  was  used  $10,590, 
showing  a  loss  in  operating  the  road  of  $25,369  28.  We  have  experi- 
mented on  the  proposition  of  giving  the  people  a  very  low  rate,  trying 
to  develop  the  country,  and  see  if  we  could  not  get  returns  in  that  Avay 
instead  of  charging  a  higher  rate.  The  maximum  rate,  as  allowed  by 
law,  as  we  found  in  1884,  is  10  cents  a  mile  for  passengers,  and  15  cents 
a  ton  a  mile  for  freight  in  the  State  of  California,  upon  which  we  based 
the  making  of  the  investment,  but  this  rate  has  never  been  used. 

Our  passenger  rates  have  never  been  7  cents  a  mile,  and  our  freight 
rates  have  never  been  10  cents  a  mile,  on  any  article.  Our  passengers 
between  all  stations  for  the  calendar  year  1892  were  seven  thousand 
seven  hundred  and  ninety-five;  average  number  per  train,  twelve.  If 
Mr.  Leeds  were  here  he  would  bear  me  out  in  the  proposition,  that  it 
would  not  have  cost  any  more  to  haul  fifty  than  it  does  twelve.  The 
average  distance   each    passenger    was    carried    was    sixty-one    miles. 


The  receipts  from  each  passenger  were  $2  67.  The  receipts  per  mile 
from  each  passenger  were  4  cents.  The  total  number  of  tons  of  freight 
of  all  classes  was  fourteen  thousand  five  hundred  and  eighty-eight; 
the  average  tons  in  each  train,  twenty-three — a  very  light  load  for  an 
engine,  but  you  have  got  to  go.  The  average  distance  hauled  one  ton 
was  sixty  miles.  The  receipts  from  each  ton  of  freight  were  $3  16;  per 
ton  per  mile,  5  cents.  We  find  that  the  portion  of  the  road  that  was 
constructed  in  1884,  1885,  and  1886  shows  signs  of  decay;  our  bridges 
are  costing  a  great  deal  of  expense,  and  our  ties  are  about  gone.  In 
maintaining  this  year  Ave  have  met  with  the  heaviest  expense  we  have 
in  any  previous  years.  The  ties  rot.  Mr.  Leeds  seems  to  doubt  that. 
He  thought,  with  the  climate  we  have  here — he  thought  we  did  not  have 
snow  or  any  of  the  elements  to  contend  with,  which  they  did  in  Kansas 
— that  it  was  very  much  cheaper  to  operate  a  road  here.  We  get  five 
or  six  or  seven  feet  of  snow  on  the  level  in  parts  of  Lassen  County,  near 
the  summit  of  the  Sierra  Nevada  Mountains.  We  spent,  in  the  hard 
winter  of  three  years  ago,  $8,000  to  haul  $500  worth  of  hay  to  the 
starving  cattle  of  Lassen  County,  in  trying  to  open  the  road  from  the 
snows.  We  did  not  do  this  for  the  cattle.  I  am  not  making  any  such 
assertion  as  that;  but  in  trying  to  operate  the  road  and  haul  business 
that  might  be  offered;  but  we  have  had  no  winter  business  to  speak  of 
in  the  past  years.  It  would  have  been  a  business  proposition  for  us  to 
have  closed  the  road  in  the  month  of  November,  and  let  all  engines 
stand  in  the  roundhouse  until  the  month  of  April;  but  as  people  had 
settled  on  the  line  of  the  road  because  the  railroad  was  there,  we  felt 
if  the  road  was  worth  having  at  all,  it  was  worth  operating  through  the 
entire  year.  I  spoke  of  the  decay  that  constantly  takes  place  on  the 
road.  Our  fences  rot  just  as  fast,  and  go  just  as  fast  if  we  run  one  train 
each  way  a  day,  or  one  train  a  week,  as  the  road  that  runs  one  hundred. 
The  storms  come  and  do  us  the  same  damage.  Our  banks  wash  away 
and  our  ties  rot,  and  in  many  other  respects  these  expenses  connected 
with  a  railroad  are  the  same,  whether  the  trains  are  many  or  few. 

You  have  the  right  of  way  to  take  care  of,  which  is  the  same  whether 
trains  are  many  or  few.  We  might  cheapen  our  service*  We  might 
hire  cheap  men — incompetent  men  to  run  the  trains,  as  they  did  in 
Wisconsin  and  Minnesota.  I  was  there  at  the  time  there  was  a  press- 
ure of  economy  brought  about  by  adverse  legislation,  that  caused  the 
property  of  the  Milwaukee  and  St.  Paul  Railroad  to  run  down,  to  the 
detriment  not  alone  of  the  stockholders  of  the  different  lines,  but  the 
people  as  well.  We  had  a  survey  made  and  estimates  carefully  pre- 
pared, ascertaining  the  price  of  steel  rails,  which  the  entire  line  is  laid 
of,  as  we  thought  of  extending  the  road  into  Modoc  County,  California, 
which  I  believe  is  the  best  undeveloped  country  in  the  United  States. 
I  believe  it  is  the  best  undeveloped  country.  Our  folks  did  not  build 
the  road  for  charitable  purposes,  but  with  the  hope,  and  they  have  been 
running  it  with  the  hojDC  that,  with  the  proper  development  of  the 
country,  it  would  be  a  splendid  piece  of  property.  Our  income  last 
year,  for  the  thirty  miles,  Avas  $74,000.  If  we  were  to  build  into  Modoc 
County  and  extend  the  line  one  hundred  miles,  that  county  would 
develop  and  make  homes  for  so  many  people  that  our  earnings  would 
very  soon  be  $4,000  a  mile. 

It  would  not  be  profitable  for  us  to  make  it  $4,000  a  mile,  and  if  we 
did  make  it  $4,000  a  mile,  and  if  we  were  bo  disposed,  we  could  cover  it 


—  48  — 

up  from  getting  out,  as  Mr.  Leeds  might  do  it.  We  are  brought  up  in 
the  face  and  eyes  of  the  fact  that  this  proposed  amendment,  which  Mr. 
Leeds  has  found  a  gentleman,  representing  the  State  of  California,  to- 
introduce,  will  take  from  us  the  little  we  have  now  got,  by  bringing  our 
good  money  from  another  State  and  investing  it  in  California.  Mr. 
Leeds  said  here  Monday  evening  he  could  not  get  the  data  necessary  to 
state  what  was  right  in  regard  to  the  smaller  roads  in  the  State  of  Cali- 
fornia. Mr.  Chairman,  and  the  gentleman  who  introduced  this  bill, 
you  well  know,  and  Mr.  Leeds  knows,  that  each  and  every  one  of  us 
has  a  sworn  statement  on  tile  with  the  Railroad  Commissioners  of  the 
State  of  California,  which  is  open  for  inspection  by  any  one.  His  asser- 
tion that  he  could  not  get  the  data  from  which  to  find  what  would  be- 
just,  is  not  sound.  A  bill  or  amendment  to  the  Constitution,  taking 
away  the  right  to  make  a  reasonable  interest  on  an  investment,  after- 
paying  ordinary  expenses,  is  dangerous;  it  is  discouraging  to  capital; 
it  will  not  bring  capital  to  the  State;  it  will  make  the  capital  get  out  of 
it  as  soon  as  possible.  I  will  say  right  here  for  our  road,  and  it  can  be- 
distinctly  and  absolutely  and  plainly  understood,  that  it  is  a  fact  that 
we  would  not  extend  the  road  one  mile,  nor  spend  one  dollar,  while- 
this  class  of  legislation  continues,  under  no  circumstances.  On  the 
contrary,  we  will  part  at  a  great  loss  with  what  we  have  and  gladly 
withdraw.  I  never  saw  Mr.  Leeds;  I  never  met  the  gentleman.  I  had 
read  of  him  a  great  deal,  and  he  was  great  in  the  newspapers,  but  when 
I  canje  here  and  heard  him  talk  and  make  his  assertions  in  regard  to- 
railroads,  claiming  to  be  an  expert,  I  was  much  disappointed.  The 
statement  he  made  in  regard  to  the  consumption  of  fuel  in  the  State  of 
California,  being  very  much  less  than  it  is  in  the  Eastern  States,  is  not  at 
all  sound.  I  do  not  understand  it,  but  I  would  be  pleased  to  argue  the 
subject  with  him.  He  said,  as  a  matter  of  economy  that  could  be 
exercised  by  the  Southern  Pacific  Company — a  bright  idea  advanced  by 
him  was,  that  they  could  lessen  their  operating  expenses  by  taking  the- 
old  ties,  after  they  were  rotted  and  worn  out,  and  use  them  for  fence 
posts.  We  are  a  narrow  gauge  road;  the  ties  are  only  five  feet  long, 
and  I  want  the  gentlemen  now  assembled  in  the  Legislature  to  know, 
when  the  time  comes  to  canvass  this  bill  under  consideration,  that  the 
ties  are  surely  not  long  enough  for  fence  posts.  We  cannot  take  rotten 
ties  and  make  any  ])articular  use  of  them.  I  do  not  know  anything  else 
that  I  need  detain  the  committee  with;  if  there  are  any  questions,  I  am 
ready. 

Mr.  Fulton:  I  want  to  speak  of  the  expense  of  constructing  railroads 
in  California.  Steel  rail,  free  on  board  cars  in  the  East,  cost  $29.  The 
last  rails  we  purchased  for  the  construction  of  our  road,  in  San  Fran- 
cisco, cost  $55.  We  have  found  that  the  Pacific  Rolling  Mills  people,  or 
the  people  we  buy  from  in  San  Francisco — many  of  them  meml)ers  of 
the  Traffic  Association,  and  becoming  well  posted  on  the  proposition  of 
freight  rates — quote  us  the  Eastern  price  with  freight  added  from  East- 
ern countries  to  San  Francisco.  When  it  is  necessary  for  us  to  buy 
materials  for  the  construction  of  our  roads,  we  find  the  prices  prevailing 
in  San  Francisco  are  the  Eastern  prices  with  freight  added,  or  "all  the 
commodity  will  bear."  By  the  amendment  to  the  Constitution  pro- 
posed— we  do  not  like  to  take  the  medicine;  but  taking  lumber,  shingles,. 
laths,  etc.,  for  a  distance  of  fifty  miles,  the  present  tariff  is  12-^  cents  per 
one  hundred;  by  the  amendment,  5  cents.     Flour,  wheat,  etc.,  24  cents- 


—  49  — 

at  present;  by  the  tariff  in  the  amendment,  6  cents.  That  is  the  justice 
of  the  amendment.  It  was  intended  that  Mr.  Leeds,  with  his  $10,000 
a  year,  intended  to  do  justice  to  the  railroads  of  California.  Barley, 
rye,  oats,  etc.,  present  20  cents;  by  the  amendment,  5  cents.  Bricks, 
sand,  etc.,  present,  10  cents;  by  the  amendment,  4  cents.  Our  first- 
class  rate  for  one  hundred  pounds  for  fifty  miles  is  40  cents;  by  the 
amendment,  27  cents. 

Mr.  Dolberk  here  arose  and  asked:  "Does  this  bill  include  all  roads 
using  rails  and  locomotives?" 

Chairman  Earl:  I  cannot  say;  you  must  judge. 

Mr.  Dolbere:  There  are  forty  or  fifty  roads  that  have  steel  rails  and 
haul  goods.     Some  unincorporated,  and  some  are  common  carriers. 

Mr.  Earl:  Do  you  mean  the  logging  roads? 

Mr.  Dolbere:  Yes,  sir;  our  firm  is  the  half  owner  of  one.  Can't  the 
author  of  the  bill  tell  us  if  we  are  taken  in? 

[Mr.  Dolbere  was  told  that  he  must  judge  of  that.  The  committee 
was  not  there  to  reply,  but  to  hear.] 

Mr.  Kidder:  Yes,  sir;  and  there  is  the  Towle  Bros',  road,  twenty 
miles  long.     It  carries  freight.     Bring  it  in  and  cinch  it  too. 

Mr.  Earl:  Mr.  Dolbere,  do  you  refer  to  the  Mad  River  road? 

Mr.  Dolbere:  No,  sir;  to  a  Eureka  road,  and  to  others,  two  of  which 
I  am  interested  in. 

The  Committee  here  adjourned  until  Tuesday  evening. 


Statement  of  K.  H.  Wade. 

(Representing  Southern  California  Railway.) 

To   the  hovorable  Chairman   and    Gentlemen    of  Senate    Committee    on 
Corporations: 

Gentlemen:  Representing  the  interests  of  the  Southern  California 
Railway — Santa  Fe  route — I  respectfully  ask  your  consideration  of  the 
following  points  bearing  on  the  proposed  constitutional  amendment 
relating  to  "freights  and  fares:" 

We  believe  the  construction  and  operation  of  railway  lines  is  a  matter 
of  mutual  benefit  for  the  owners  as  well  as  the  general  public,  and  that 
persons  who  have  invested  in  such  property  are  entitled  to  the  same 
consideration  and  protection  as  if  their  capital  was  invested  in  other 
enterprises;  we  therefore  trust  your  honorable  body  will  decline  to 
entertain  the  proposed  amendment,  and  respectfully  call  your  attention 
to  some  of  the  important  facts  herewith  stated. 

The  owners  of  this  Southern  California  Railway  Company  have 
invested  over  ten  millions  of  money  in  its  construction  and  operation, 
and  have  just  begun  to  receive  a  portion  of  the  interest  on  fixed  expense 
in  return;  they  have  received  no  benefits  from  subsidies  or  land  grants, 
which  could  be  utilized  for  the  benefit  of  this  company;  the  rates  of 
interest,  State,  county,  school,  and  irrigation  taxes,  have  been  higher 
than  in  the  Eastern  States. 

The  population  in  the  six  southern  counties  is  not  over  six  persons 
per  square  mile;  in  Kansas  it  is  thirty-eight,  while  in  Illinois  it  is 
sixty-seven.  The  proportion  of  this  territory  available  for  cultivation 
4 


—  50  — 

in  Southern  California  is  not  over  one  third  of  the  total  area,  while  in 
Kansas  and  Illinois  at  least  90  per  cent  of  the  entire  country  can  be 
tilled  to  advantage. 

The  construction  of  these  lines  of  railway  was  undertaken  under 
many  difficulties,  and  the  promotors  are  certainly  entitled  to  protec- 
tion. The  roads  were  difficult  to  build  and  costly  to  maintain;  the 
percentage  of  heavy  grades  and  sharp  curves  are  double  that  of  any 
line  in  Illinois  or  Kansas.  The  future  requirements  for  additional 
facihties  and  equipment  will  require  large  expenditures,  the  same  as 
any  other  industry,  and  this  expense  must  be  met  by  increased 
earnings. 

Tie  maintenance  of  railways  in  this  territory  is  much  more  expen- 
sive than  in  Illinois  or  Kansas.  Repairs  on  account  of  floods  and 
washouts  will  average  1100,000  per  year,  and  will  continue  to  be  a  great 
expense  for  many  years.  Most  of  our  line  requires  ballasting,  the  soil 
being  of  such  a  nature  that  in  wet  seasons  the  road  becomes  almost 
impassable;  some  fifty  miles  have  already  been  treated  in  this  manner 
at  ail  average  expense  of  11,500  per  mile,  and  the  entire  road  must  be 
ballasted  before  the  track  can  be  maintained  economically.  Modern 
equipment  must  be  added  at  heavy  expense  from  time  to  time  as  busi- 
ness interests  require;  this  is  specially  the  case  as  regards  the  fruit  and 
vegi  table  traffic  to  the  East.  The  operation  of  our  railway  shows 
largely  increased  cost  over  those  in  Kansas  or  Illinois.  Fuel  is  one 
of  the  largest  items. 

The  Wabash  road  in  Illinois  shows  cost  of  fuel,  4  cents  per  ton  per 
mile;  Atchison,  Topeka,  and  Santa  Fe  road,  as  a  system,  most  of  their 
lines  being  in  Kansas,  cost  7  cents;  Atlantic  and  Pacific,  8  cents;  Southern 
California  Railway,  24  cents.  As  compared  with  Illinois  roads,  increased 
expense  on  Southern  California  Railway  equals  20  per  cent  of  gross 
receipts,  or,  in  round  numbers,  amounts  to  $1,000  per  day;  general 
labor  expense  is,  at  least,  30  per  cent  greater  than  in  Illinois.  The  com- 
parisons with  Kansas  would  show  about  25  per  cent,  or  $750  per  day, 
increased  cost  for  fuel  in  Southern  California,  and  25  per  cent  more  for 
labor.  In  the  matter  of  traffic,  our  records  show:  In  Kansas,  average 
distance  freight  hauled  was  two  hundred  and  thirty-seven  miles;  on 
Southern  California  Railway,  ninety-one  miles.  Distance  passengers 
hauled:  Kansas,  sixty-eight  and  eight  tenths  miles;  Southern  California 
Railway,  thirty-five  and  six  tenths  miles.  The  Wabash  Railroad,  in 
Illinois,  loads  each  day  an  average  of  one  car  per  mile  of  road;  South- 
ern California  Railway  averages  one  car  to  each  five  miles  of  road. 

The  rates  proposed,  as  we  understand  them,  would  in  many  cases 
bring  the  rates  below  actual  cost  for  performing  the  service.  Our  result 
for  the  past  year  shows  as  follows:  Average  revenue,  all  freight  traffic, 
2.71  per  ton  per  mile;  average  cost,  all  freight  traffic,  1.67  per  ton  per 
mile.  Cost  does  not  include  extraordinary  expense  of  improvements, 
additional  facilities,  new  equipment,  handling  company  freight,  such  as 
coal,  ties,  timber,  etc.,  which  would  amount  on  an  average  to  50  cents 
per  ton  on  the  year's  business,  leaving  only  .0054  per  ton  per  mile  to 
apply  on  interest  and  other  fixed  charges.  Average  revenue,  all  pas- 
senger traffic,  .02672  per  mile;  average  cost,  all  passenger  traffic, 
,02615  per  mile,  showing  apparent  net  of  .0057  per  mile.  The  same  con- 
ditions exist  regarding  extraordinary  expenses,  in  the   freight  traffic 


—  51  — 

The  pro])osed  rate  is  23?  per  cent  less  than  Kansas  rate  for  our  average 
haul  of  ninety  miles,  and  also  averages  less  than  Illinois. 

Expense  for  protection  against  fires  and  claims  to  be  settled  on  this 
account  is  no  small  item.  Expense  in  holding  trains  down  the  heavy 
grades  should  be  considered,  as  well  as  the  extra  power  required  to  haul 
trains  up  the  grades.  The  average  train  load  in  freight  service  in 
Southern  California  is  not  over  three  hundred  tons,  while  in  Illinois  or 
Kansas  the  same  power  would  haul  at  least  six  hundred  tons.  I  speak 
of  the  Wabash  road  from  the  fact  that  I  was  engaged  with  that  com- 
pany for  twenty-five  years  in  various  capacities,  from  operator  to  Gen- 
eral Superintendent,  and  only  state  what  I  know  to  be  facts.  We  have 
no  complaints  regarding  rates  in  Southern  California,  to  my  knowledge, 
and  believe  existing  conditions  are  satisfactory.  I  attach  copies  of  com- 
parative statement  as  between  existing  tariffs  and  the  amendment  pro- 
posed, and  trust  you  may  realize  the  equity  of  our  claims  for  largely 
increased  rates  over  those  enjoyed  by  the  thickly  settled  States  in  the 
East. 

As  the  volume  of  business  increases,  and  com])eting  lines  develop 
new  country,  we  must  expect  to  reduce  rates.  The  Santa  Fe  system 
has  carried  the  Atlantic  and  Pacific  line  for  years  at  an  annual  loss  of 
over  $1,000,000  per  year,  trusting  in  the  future  development  of  this 
country,  and  believe  they  have  a  legitimate  claim  upon  the  kind  con- 
sideration of  your  honorable  body — and  in  view  of  the  satisfactory 
relations  existing  between  our  company  and  its  patrons  in  Southern 
California,  we  trust  no  action  will  be  taken  which  would  lessen  our 
revenues,  or  prevent  us  from  providing  desirable  facilities,  and  advanc- 
ing the  development  of  this  territory.  The  Railway  Commission  in  the 
State  of  Illinois,  under  which  I  operated  for  years,  was  put  in  effect 
under  a  law  adopted  in  1871,  and  has,  I  think,  given  the  most  general 
satisfaction,  both  to  the  public  and  to  the  railways,  of  any  system  which 
has  come  under  my  notice.     All  of  which  is  respectfully  submitted. 

I  will  submit  the  following  statements: 


Comparison  of  Freight  Raten  as  between  Southern  California  Raihvay,  Kansas  and  Illinois 
Distance  Tariffs,  and  Proposed  California  Amendment. 


to 

p 
B 
B 

3 

o 
o 
o 

3 

rr 

c 

5- 

!S 

A. 

B. 

C. 

D. 

B. 

fSo.  Cal.  Ry..-. 

3 
13 
13.16 

3 

11 

11.28 

3 

9 

9.40 

3^ 

3 

7 

7.52 

3% 

3 
6 

6.01 
3 

3 
6 

4.70 
3 

3 
5 

4.23 
3 

3 
4 

3.76 
3 

3 
4 

3.29 
3 

3 

5 

,  Kansas 

1  Illinois 

[Amendment  - 

3% 

3 

2.96 

3 

fSo.  Cal.  Ry.... 

7 

15 
15.04 

4K 

7 
13 
13.16 

4 

7 

11 
11.28 

4 

7 
9 

8.46 
4 

7 
7 
6.76 

7 
7 

5.64 
4 

7 
6 

5.17 
3>^ 

7 
5 

4.23 
3 

7 
4 

3.76 
3 

5 

10 

1  Kansas 

1  Illinois .- 

7M 

3 

3  46 

[Amendment  . 



3 

fSo.  Cal.  Ry.... 

11 

18 

16.92 
8 

11 
15 
15.04 

7 

11 
13 

13.16 
6 

11 
11 

9.40 

5 

11 

8 

7.52 

4 

11 

8 

6.58 

5 

10 
7 

6.11 
4 

9 
6 

4.70 
3>^ 

9 

5 

4.20 

3 

7 

15 

Kjyj.    ^Ci.    J.VJ. 

J  Kansas 

1  Illinois 

11^ 

4 
3  59 

[.Amendment  . 

3 

C0MP.\RIS0> 

OF  Freight  Rates— Continued. 

1 

p 

X 

B 

c 
B 

2 
•-J 

re 
o 
o 

o 

p- 

A. 

B. 

C. 

D. 

E. 

r  So  Cal.  Ry. 

15 
20 

18.80 
12 

15 
17 

16.92 
10 

15 
15 

14.10 
9 

15 
13 
10.34 

7 

15 
9 

8.27 
5 

15 
9 

7.05 
6 

12 
8 

6.58 
5 

11 

7 
5.17 

4 

11 
5 

4.23 
3 

8 

20 

Kansas 

1  Illinois    

15 

4 
3.81 

[Amendment  . 

3 

rSo.  Cal.  Ry..-- 

23 

24 
22.56 

18 

23 
21 

19.74 
14 

23 
19 

15.98 
13 

23 

15 

11.98 
9 

20 
11 

9.58 
7 

20 
11 

7.99 

8 

16 
9 

7.52 
6K 

15 

8 

6.02 

5)^ 

15 
6 

4.70 
4>^ 

9 

30 

Kansas 

1  Illinois 

22H 

4^ 
4.23 

.Amendment  - 

•6V2. 

rSo.  Cal.  Ry.-- 

30 

28 

26.32 

22 

30 

25 

21.62 

18 

30 
21 

17.86 
16 

30 
19 

13.16 
13 

26 
13 

10.52 
8 

26 
13 

8.93 

9 

20 
10 
8.46 

7 

18 
8 

6.58 
6 

18 
6 

5.08 
5 

12 

40 

Kansas.. 

1  Illinois 

30 

5 

4.57 

.Amendment  . 

sy^ 

rSo.  Cal.  Ry 

38 
32 

29.14 
25 

38 
29 

23.50 
20 

36 
25 
19.74 

18 

55 
21 

14.10 
15 

35 
15 

11.28 
10 

35 
15 
9.64 
11 

26 
11 
9.40 

8 

23 
9 
6.96 

7 

23 

7 

5.45 

6 

15 

50 

1  Kansas 

1  Illinois 

37K 

4.91 
5K 

.Amendment  - 

4 

rSo.  Cal.  Ry...- 

45 
36 

31.52 
28 

44 
32 

25.38 
23 

42 

28 

21.62 

20 

41 

23 

15.04 

17 

40 
17 

12.03 
12 

40 
17 

10.58 
13 

30 
12 

9.87 

9 

27 
10 

7.33 

8 

27 
8 

5.83 
6 

16 

60 

Kansas 

1  Illinois 

[Amendment  . 

45 

6 

5.24 

5 

f  So.  Cal.  Ry. 

53 
40 

32.90 
32 

51 

36 

27.26 

25 

49 
31 

23.03 
22 

47 
25 

15.98 
18 

46 
19 

12.78 
13 

46 
19 

11.05 
14 

34 
13 

10.34 
10 

31 
11 

7.71 

9 

31 
8 

6.16 
7 

17 

70 

J  Kansas 

1  Illinois .  

52M 

6K 
5.55 

[Amendment  . 

5 

rSo.  Cal.  Ry 

68 
48 

36.66 
38 

65 
42 

30.08 
30 

63 
36 

24.34 
26 

61 
29 

17.86 
21 

58 
25 

14.28 
16 

58 
23 

11.98 
18 

42 
15 

11.09 
13 

38 
13 

8.46 
10 

38 
9 

6.77 
8 

20 

90 

J  Kansas 

I  Illinois 

67K 

7 
6.09 

[Amendment  . 

6 

rSo.  Cal.  Ry.... 

75 
52 
38.54 

73 

44 

31.02 

32 

70 

38 
24.90 

28 

70 
31 

18.80 
22 

63 

27 

15.04 

17 

63 
24 

12.45 
19 

46 

16 

11.47 

14 

41 

14 
8.84 
11 

41 
10 

7.05 

8 

22 

100 

J  Kansas - 

75 

7K 
6  34 

[Amendment  . 

40 

7 

rSo.  Cal.  Ry.... 

90 
57 

42.30 
44 

87 
48 

32.90 
36 

84 
43 

26.03 
32 

81 
35 

20.30 
26 

71 
31 

16.24 
21 

71 
26 

13.35 
23 

53 
18 

12.22 
16 

48 
16 
9.59 
13 

48 
12 
7.66 
10 

25 

120 

,  Kansas 

I  Illinois 

90 

9 
6  89 

[Amendment  . 

8 

rSo.  Cal.  Ry 

105 
61 

44.18 
48 

102 
52 

.34.78 
39 

98 
47 

27.16 
34 

90 
39 

21.80 
28 

78 
34 

17.44 
23 

78 
28 

14.10 
25 

58 
20 

12.88 
18 

52 
18 

10.34 
14 

52 
12 
8.22 
11 

30 

140 

J  Kansas 

1  Illinois 

[Amendment  . 

105 

10 
7.41 
8 

—  53  — 

ATCHISON,  TOPEKA,  AND  SANTA  FE  RAILROAD  COMPANY. 

Locomotive  Perfokmance  Statistics. 

September,  1892. 

Total  miles  run 2,309,909 

Total  miles  run,  exclusive  of  switch  and  work  train 1,875,190 

Total  engines  owned .... 834 

Average  number  of  engines  on  line  (owned  and  rented) 738 

Average  miles  run  per  engine 3,130 

Average  number  of  engines  (owned  and  rented),  less  switch  and  work 531 

Average  miles  run  per  engine. 3,531 

Average  number  engines  (owned  and  rented),  less  switch,  work,  and  No. in  shop  465 

Average  miles  run  per  engine 4,033 

Cost  per  mile  run — 

For  stores (cts.)  0.14 

For  oil  and. waste 0.28 

For  fuel — coal  and  wood.. 6.50 

For  engineers  and  firemen 6.59 

For  other  attendants  and  help 1.40 

For  repairs _..  4.73 

19.64 

Miles  run  to  one  ton  of  coal 24.63 

Miles  run  to  one  pint  of  engine  oil. 30.88 

Miles  run  to  one  pint  of  valve  oil 50.01 

Miles  run  to  one  pint  of  illuminating  oil 48.84 

Miles  run  to  one  pint  of  lubricating  oil 19.09 

Miles  run  to  one  pint  of  all  kinds  of  oil 13.73 

Miles  run  to  one  pound  of  waste 95.42 

Tons  of  coal  used,  93,802.600;  rated  at U  54 

Cords  of  wood  used,  2,221.14;  rated  at .$2  16 

Total  mileage  of  road _ 4,706.77 

October,  1892. 

Total  miles  run 2,391,942 

Total  miles  run,  exclusive  of  switch  and  work  train.. 1,974,671 

Total  engines  owned 834 

Average  number  engines  on  line  (owned  and  rented) 737 

Average  miles  run  per  engine _ 3,246 

Average  number  engines  (owned  and  rented),  less  switch  and  work 593 

Average  miles  run  per  engine 3,330 

Averagenumber  engines  (owned  and  rented),  less  switch,  work,  and  No.  in  shop  4S1 

Average  miles  run  per  engine 4,105 

Cost  per  mile  run — 

For  stores (cts.)  0.14 

For  oil  and  waste _  0.28 

For  fuel — coal  and  wood 7.36 

For  engineers  and  firemen  ._ 6.96 

For  other  attendants  and  help 1.49 

For  repairs 4.19 

21.02 

Miles  run  to  one  ton  of  coal 22.83 

Miles  run  to  one  pint  of  engine  oil 32.84 

Miles  run  to  one  pint  of  valve  oil 53.05 

Miles  run  to  one  pint  of  illuminating  oil 44.69 

Miles  run  to  one  pint  of  lubricating  oil 20.28 

Miles  run  to  one  pint  of  all  kinds  of  oil 13.95 

Miles  run  to  one  pound  of  waste 100.44 

Tons  of  coal  used,  104,784.800,  rated  at .$1  58 

Cords  of  wood  used,  3,334.12,  rated  at .$2  12 

Total  mileage  of  road 4,706.77 


—  54  — 

November,  1892. 

Total  miles  run --- 2,312,940 

Total  miles  run,  exclusive  of  switch  and  work  train , 1,911,239 

Total  engines  owned ^^ 

Average  number  of  engines  on  lines  (owned  and  rented) 739 

Average  miles  run  per  engine 3.130 

Average  number  engines  (owned  and  rented),  less  switch  and  work 603 

Average  miles  run  per  engine ■---_ 3,169 

Average  number  engines  (owned  and  rented),  less  switch,  work,  and  No.  in  shop.  498 

Average  miles  run  per  engine 3,838 

Cost  per  mile  run — 

For  stores - (cts.)  0.14 

For  oil  and  waste 0.27 

For  fuel— coal  and  wood ._ - 6.73 

For  engineers  and  firemen -  6.79 

For  other  attendants  and  help — 1-50 

For  repairs —         ■   4.91 

• 20.34 

;Miles  run  to  one  ton  of  coal - - ---  22.92 

^liles  run  to  one  pint  of  engine  oil - -- ---  35.22 

Miles  run  to  one  pint  of  valve  oil - —  54.52 

IMiles  run  to  one  pint  of  illuminating  oil -- 38.74 

Allies  run  to  one  pint  of  lubricating  oil - - 21.40 

Miles  run  to  one  pint  of  all  kinds  of  oil - -  13.78 

Miles  run  to  one  pound  of  waste 92.89 

Tons  of  coal  usecl,  100,921.1400,  rated  at... -. $1  48 

Cords  of  wood  used,  2,540.1,  rated  at -  $2  07 

Total  mileage  of  road 4,706.77 


ATLANTIC  AND  PACIFIC   RAILROAD   COMPANY 

Locomotive  Performance  Statistics, 

November,  1892. 

Total  miles  run 337,418 

Total  miles  run,  exclusive  of  switch  and  work  train 299,974 

Total  engines  owned  . 95 

Average  number  engines  on  line  (owned  and  rented) 110 

Average  miles  run  per  engine 3,0(i7 

Average  number  engines  (owned  and  rented),  less  switch  and  work 100 

Average  miles  run  per  engine 2,999 

Average  number  engines  (owned  and  rented),  less  switch,  wor-k,  and  No.  in  shops  68 

Average  miles  run  per  engine 4,411 

Cost  per  mile  run — 

For  stores (cts.)  0.07 

For  oil  and  waste 0.40 

For  fuel — coal  and  wood 8.04 

For  engineers  and  firemen 7.02 

For  other  attendants  and  help 1.78 

For  repairs 7.42 

24.73 

^Sliles  run  to  one  ton  of  coal 18.54 

Miles  run  to  one  pint  of  engine  oil 23.74 

Miles  run  to  one  pint  of  valve  oil 43.54 

Miles  run  to  one  pint  of  illuminating  oil 39.03 

Miles  run  to  one  pint  of  lubricating  oil \  Ib.bQ 

Miles  run  to  one  pint  of  all  kinds  of  oil 11.15 

Miles  run  to  one  pound  of  waste 92.47 

Tons  of  coal  used,  18,200,  rated  at '.'.'.'.'.  $1  50 

Cords  of  wood  used,  152>^,  rated  at... _ $1  38A 

Total  mileage  of  road _ "_\\  834 


—  55  — 

December,  1892. 

Total  miles  run 297,700 

Total  miles  run,  exclusive  of  switch  and  work  train 26:J,()26 

Total  engines  owned 95 

Average  number  engines  on  line  (owned  and  rented) 113 

Average  miles  run  per  engine. .. - —  2,633 

Average  number  engines  (owned  and  rented),  less  switch  and  work 103 

Average  miles  run  per  engine _ 2,549 

Averagenumber  engines  (owned  and  rented),  less  switch,  work,  and  No.  in  shops  69 

Average  miles  run  per  engine 4,314 

Cost  per  mile  run — 

For  stores - .- (cts.)  0.06 

For  oil  and  waste 0.43 

For  fuel— coal  and  wood 9.31 

For  engineers  and  firemen -.- 7.37 

For  other  attendants  and  help -..  1.94 

For  repairs 8.65 

27.76 

Miles  run  to  one  ton  of  coal - 16.27 

Miles  run  to  one  pint  of  engine  oil. - - - 20.81 

Miles  run  to  one  pint  of  valve  oil. -..  42.29 

Miles  run  to  one  pint  of  illuminating  oil 31.38 

Miles  run  to  one  pint  of  lubricating  oil 13.95 

Miles  run  to  one  pint  of  all  kinds  of  oil 9.65 

Miles  run  to  one  pound  of  waste 76.16 

Tons  of  coal  used,  18,298,  rated  at |1  50 

Cords  of  wood  used,  397>^,  rated  at $0  60^^ 

Total  mileage  of  road 834 


THE  WABASH  RAILROAD  COMPANY, 
Performance  of  Engines,  Month  of  September,  1892,  Middle  Division. 

Miles  of  road  operated 159 

Total  number  engines.. 715 

Number  making  mileage 141]^ 

Average  miles  per  engine 4,204.08 

Engine  Mileage. 

Passenger 15.3,399 

Freight 334,876 

Switching 100,883 

Working 4,038 

Total  miles  run 59.3 Ji«3 

Miles  Run  to — 

One  ton  of  coal 24.48 

One  pint  lubricating  oil 20.94 

One  pound  waste 195.19 

Cost  per  Engine  per  Mile,  in  Cents. 

Repairs 2.99 

Stores .27 

Fuel. 3.80 

Engineers'  and  firemen's  wages 6.50 

Dispatchers  and  cleaners .87 

Total  cost  per  mile 14.43 


—  56  — 

Car  Mileage, 

PassGHsrer                                                  - - — ----  /bo.loii 

Freight-loaded  "".'.'.'.".".'.'-'-'.."."-'. ^-698,880 

Freight— empty - 2,265,6(8 

Average  passenger  cars  per  mile - ^^a 

Average  loaded  freight  cars  per  mile - - 18.18 

Cost  of  one  passenger  car  per  mile 2.57 

Cost  of  oneloaded  freight  car  per  mile - 0.88 

Pounds  of  coal  per  car  mile— passenger. 12.5.3 

Pounds  of  coal  per  car  mile — freight - 5.46 

Cost  of  coal  per  ton - 93.058 

Average  number  of  freight  cars  per  mile  (loaded  and  empty;  five  empty  cars 

equal  to  three  loaded) 20.80 

(  Passenger 31.88 

Miles  run  to  one  ton  of  coal  \  Freight.. 20.25 

Switch  work  and  other  service. 36..37 

Perfobmancb  of  Engines,  Month  of  October,  1892,  Middle  Division. 

Miles  of  road  operated 715 

Total  number  oi  engines - 161 

Number  making  mileage 144.5 

Average  miles  per  engine 4,219.07 

Engine  Mileage, 

Passenger 158,790 

Freight.... - 335,9.31 

Switching - 109,161 

Working - 5,774 

Total  miles  run 609,656 

Miles  Run  to — 

One  ton  of  coal 22.95 

One  pint  of  lubricating  oil 20.22 

One  pound  of  waste 183.74 

Cost  per  Engine  per  Mile,  in  Cents. 

Repairs 3.23 

Stores .29 

Fuel. 3.99 

Engineers'  and  firemen's  wages 6.71 

Dispatchers  and  cleaners .89 

Total  cost  per  mile 15.11 

Car  Mileage. 

Passenger 799,656 

Freight- loaded 4,570,798 

Freight— empty . 2,188,258 

Average  passenger  cars  per  mile 5.04 

Average  loaded  freight  cars  per  mile 17.51 

Cost  of  one  passenger  car  per  mile 2.52 

Cost  of  one  loaded  freight  car  per  mile 1.00 

Pounds  of  coal  per  car  mile — passenger 13.76 

Pounds  of  coal  per  car  mile — freight 6.11 

Cost  of  coal  per  ton 0.91.65 

Average  number  of  freight  cars  per  mile  (loaded  and  empty;  five  empty  cars 

equal  to  three  loaded) 20.12 

(  Passenger 28.86 

Miles  run  to  one  ton  of  coal  -J  Freight 18.72 

(  Switch  work  and  other  service. 37.19 

November,  1892 — Middle  Division. 

Miles  of  road  operated.. 715 

Total  number  of  engines 165 

Number  making  mileage _ 142.7 

Average  miles  per  engine 3,896 


-  57  — 

I  Engine  Mileage. 

Passenger 150,218 

Freight 296,887 

Switching 102,337 

Working 6,517 

Total  miles  run 555,959 

Miles  Run  to — 

'One  ton  of  coal.. 21.52 

One  pint  of  lubricating  oil 20.74 

'One  pound  of  waste... 160.68 

Cost  per  Engine  per  Mile,  in  Cents. 

Repairs 3.50 

:Stores .30 

Fuel 4.29 

Engineers  and  firemen — wages 6.64 

Dispatchers  and  cleaners .96 

Total  cost  per  mile 15.69 

Car  Mileage. 

Passenger 75.3,864 

•pvoirrhf  J  Loaded 3,927,574 

Freight  I  Ei„pty.... i;967;329 

Average  passenger  cars  per  mile 5.02 

Average  loaded  freight  cars  per  mile 17.21 

•Tost      .!  ^'^^  passenger  car  per  mile 2.79 

j  One  loaded  freight  car  jier  mile-. 1.04 

Pounds  of  coal  per  car  mile  ]  v!!f,?':?p^ -^H'^ 

'                        (rreignt b.io 

•Cost  of  coal  per  ton 0.92.4 

Average  number  of  freight  cars  per  mile  (loaded  and  emptj';  five  empty  cars 

equal  to  three  loaded) 19.86 

Passenger 27.02 

Miles  run  to  one  ton  of  coal  -J  Freight 17.26 

Switch  work  and  other  service 35.40 


SOUTHERN  CALIFORNIA  RAILWAY  COMPANY. 

Locomotive  Performance  Statistics. 

October,  1892. 

Total  miles  run 14.5.263 

Total  miles  run  exclusive  of  switch  and  work  train 124,038 

Total  engines  owned 20 

Average  number  of  engines  on  line  (owned  and  rented) 44 

Average  miles  run  per  engine 3,304 

Average  number  engines  (owned  and  rented),  less  switch  and  work 37 

Average  miles  run  per  engine.. 3,352 

Average  number  engines  (owned  and  rented),  less  switch,  work,  and  No.  in  shop  35 

Average  miles  run  per  engine 3,544 

•Cost  per  mile  run — 

For  stores (cts.)  0.04 

For  oil  and  waste.. 0.37 

For  fuel — coal  and  wood 24.53 

For  engineers  and  firemen 6.69 

For  other  attendants  and  help. 1.75 

For  repairs 4.38 

37.76 

Miles  run  to  one  ton  of  coal. 31.8 

Miles  run  to  one  pint  of  engine  oil - 23.3 

Miles  run  to  one  pint  of  valve  oil — - 35.5 

Miles  run  to  one  pint  of  illuminating  oil —  69.5 

Miles  run  to  one  pint  of  lubricating  oil - - 14.1 

Miles  run  to  one  pint  of  all  kinds  of  oil 11.7 

Miles  run  to  one  pound  of  waste 116.6 

Tons  of  coal  used,  4,56414;  rated  at |7  75 

Cords  of  wood  used,  67)^;  rated  at --  if 4  00 

Total  mileage  of  road 4'J2.4 


—  58  — 
Testimony  of  Mr.  F.  T.  Ferris. 

(Chief  Engineer,  Southern  California  Railway.) 

Mr.  AVade:  Our  Chief  Engineer,  Mr.  Ferris,  is  here,  and  is  more 
familiar  with  the  construction  of  the  road,  the  difficulties  and  obstacles 
to  be  overcome,  than  myself.  He  will  be  pleased  to  show  you  profiles, 
showing  the  mountain  ranges  we  cross,  and  information  of  that  char- 
acter. 

Chairman  Earl:  We  will  be  glad  to  hear  Mr.  Ferris. 

Mr.  Ferris:  Mr.  Chairman,  and  Gentlemen  of  the  Committee — I  have 
been  associated  with  the  California  Southern  Railway  since  its  incep- 
tion, a  period  of  about  twelve  years.  I  am,  consequently,  more  or  less 
acquainted  with  the  general  characteristics  of  the  road,  as  well  as  the 
history  of  its  building;  and,  referring  to  the  former,  I  may  say  that 
there  is  hardly  any  comparison  between  our  system,  composed  as  it  is 
of  a  number  of  little  branch  lines,  and  the  roads  of  Iowa  or  Illinois. 
We  have  a  variety  of  topographical  features  blended  over  our  entire 
system,  from  mountains  at  an  elevation  of  about  4,000  feet  to  sea  level. 
We  have  mountains,  gorges,  and  other  physical  varieties  of  engineering 
to  encounter  which  are  not  common  to  the  roads  of  Iowa  or  Illinois. 
For  instance,  from  San  Bernardino  to  the  Summit,  a  distance  of  only 
26  miles,  we  have  to  overcome  an  elevation  of  about  2800  feet.  On  that 
piece  of  the  line  we  have  in  the  neighborhood  of  18  miles  of  grade  of 
116  feet  to  the  mile,  and  some  6  miles  of  grade  of  158.04  feet  to  the  mile. 
We  have  in  the  neighborhood,  I  suppose,  of  10  or  12  per  cent,  or,  in 
mileage,  490  miles  of  grades  of  116  feet,  and  perhaps  40  per  cent  of  our 
mileage  is  composed  of  grades  of  from  1  per  cent  to  1.02  per  cent,  and 
the  balance  is  largely  made  up  of  lighter  grades.  There  is  compara- 
tively little  level  country  in  all  of  it. 

In  regard  to  the  history  of  the  building  of  the  road,  as  I  said  before, 
it  was  commenced  about  twelve  years  ago,  not  over,  and  the  first  exten- 
sion was  from  San  Diego  to  San  Bernardino.  The  first  one  hundred  and 
sixteen  miles  were  built,  I  think,  in  the  year  1882;  following  that  up 
was  a  little  extension  made  to  San  Bernardino,  and  later,  Barstow. 
This  made  the  first  portion  of  the  California  Southern  road,  with  its 
extension,  known  as  the  California  Southern  extension,  a  total  distance 
of  two  hundred  and  ten  miles.  The  California  Central  Railway  was 
then  formed,  building  a  number  of  branches  in  various  directions  to 
serve  the  country  in  the  future,  and  help  in  the  work  of  bringing  the 
three  counties  together. 

At  the  time  of  the  completion  of  the  California  Southern  Railway, 
the  business  was  all  handled  by  a  locomotive  and  about  one  car.  There 
was  no  settlement  to  speak  of  from  San  Diego  to  Oceanside,  and  from 
Oceanside  to  Colton.  I  presume,  a  half  a  dozen  houses  would  have 
covered  the  entire  number  of  houses  along  the  line  of  the  road  at  that 
time.  Subsequently,  when  the  California  Central  Railway  was  inagu- 
rated,  the  boom  of  1887  followed,  and  with  that  boom  came  the  develop- 
ment of  Southern  California  from  that  time  forward,  resulting  in  the- 
wonderful  growth  that  is  witnessed  on  every  hand,  and  especially  fol- 
lowing the  lines  of  our  road.  This  development,  of  course,  was  not 
made  without  a  very  large  expenditure  of  money,  some  ten  million 
dollars  making  up  part  of  the  cost. 


—  59  — 

Among  the  disasters  that  have  followed  the  hiiilding  of  this  road,  I 
may  mention  that  of  1884,  which  devastated  the  Temecula  Canon, 
sweeping  out  the  entire  line  from  the  head  of  the  canon  nearly  to  the 
ocean,  a  distance  of  over  twenty-five  or  twenty-six  miles,  carrying  with 
it  about  fifteen  miles  of  steel  rail,  five  of  which  were  never  found,  and 
are  unfound  to  this  day,  and  some  twenty  or  thirty  bridges,  resulting  in 
a  pecuniary  loss  of  about  $250,000.  In  other  words,  it  cost  about 
$250,000  to  reinstate  that  which  had  been  washed  away  during  this 
particular  flood.  There  was  a  period  of  some  eight  or  nine  months 
during  which  it  was  exceedingly  doubtful  whether  the  people  who 
owned  the  road  would  ever  put  the  money  back  again  in  order  to  rein- 
state it,  but  finally  they  did  so,  with  the  result  that  again,  a  few  years 
ago — two  years  ago,  I  think,  it  is  now — another  flood  came,  resulting 
not  quite  so  disastrously  as  the  first,  still,  devastating  the  country  to 
the  extent  of  requiring  $150,000  to  now  rebuild  the  canon  with  a  proper 
road.  However,  the  line  is  not  absolutely  necessary  to  the  traffic, 
because  of  the  construction  by  the  California  Central  of  a  line  of  road 
following  the  coast  by  the  way  of  San  Juan  Capistrano,  Santa  Ana,  and 
Orange,  and  around  up  the  Santa  Ana  Canon  back  to  San  Bernardino, 
making  the  line  a  little  over  seventeen  miles  longer  than  it  was  origin- 
ally by  the  direct  line  through  the  Temecula  and  San  Jacinto  Canons. 

Within  the  past  few  5^ears,  notwithstanding  the  growth  of  the  country, 
we  have  endeavored  from  time  to  time  to  increase  our  mileage  by  desir- 
able little  additions  to  our  s^^stem.  They  have  been  made  and  resulted 
in  development  of  the  country,  by  reason  of  the  showing  we  were  enabled 
to  make  of  their  necessity  to  our  system  in  order  to  reap  the  growth 
and  development  of  the  country. 

I  feel  that  if  this  bill — the  one  proposed — takes  efiect,  that  it  will 
result  in  a  total  annihilation  of  the  free  and  rapid  development  of  the 
southern  country,  about  which  we  promise  so  much.  Mr.  Wade  has 
already  given  you  the  figures  in  relation  to  the  business  of  the  road,  or 
at  least  he  stated  that  they  are  at  hand  so  that  they  can  be  had,  and 
from  those  you  will  doubtless  see  that  the  stockholders  as  yet  have  had 
but  poor  return  from  their  ten  millions  invested,  except  for  the  fact  that 
they  have  developed  the  southern  country  to  a  very  large  extent;  in 
fact,  to  an  extent  hardly  appreciated  by  the  people  who  live  in  the 
northern  portion  of  the  State. 

I  do  not  know  that  I  can  add  anything  more  to  what  I  have  alread}'' 
said  in  regard  to  the  physicial  characteristics  of  the  road  or  to  its  oper- 
ating as  a  feature  in  the  development  of  the  country. 


Testimony  of  William  Collier. 

(Attorney  for  the  Southern  California  Railway.) 

Mr.  Wade:  Mr.  Chairman,  I  wdll  be  pleased  if  you  would  listen  to 
Mr.  Collier,  who  would  like  to  make  some  statements  in  regard  to  his 
experience  in  the  State  of  Illinois  and  Iowa,  on  the  efi'ect  of  laws  on 
the  regulation  of  rates  in  those  States. 

Chairman  Earl:  We  will  be  pleased  to  hear  from  you,  Mr.  Collier. 

Mr.  Collier:  Mr.  Chairman,  and  Gentlemen  of  the  Committee — I 
will  only  occupy  a  few  moments  of  your  time,  in  order  to  briefly  call 


—  60  — 

your  attention  to  something  you  may  be  already  familiar  with,  but 
having  been  myself  a  resident  of  the  State  of  Iowa,  in  a  time  something 
like  this,  the  matter  occurred  to  me  at  once  upon  my  attention  being 
called  to  these  matters.  In  1874,  in  the  laws  of  the  Fifteenth  General 
Assembly,  on  page  1,861,  you  will  find  the  result  of  an  excitement 
something  similar  to  this.  The  Legislature  for  that  year  adopted  in  that 
State  a  distance  tariff  and  classification,  and  put  it  into  the  Statute 
Book,  not  in  the  Constitution.  This  matter  was  suggested  to  me  by  a 
question  asked  by  one  of  the  committee  as  to  whether  or  not  there  was 
any  precedent.  I  believe  that  the  question,  however,  was  confined  to  the 
matter  as  to  whether  or  not  there  was  any  precedent  for  adopting  into 
a,  State  Constitution  such  a  provision  as  has  been  proposed  here. 

This,  of  course,  does  not  apply,  as  it  was  not  in  their  State  Constitu- 
tion. It  was  simply  a  State  statute  of  the  State  of  Iowa.  It  was 
adopted  in  1874.  There  had  been  a  very  exciting  election  preceding 
the  adoption  of  this  tariff,  and  both  houses  were  enthusiastic  for  such 
legi«hition.  It  is  complete  here;  it  covers  forty  or  fifty  pages  of  this 
statute  book.  I  presume  there  are  others  of  this  kind  in  other  States, 
but  this  is  the  only  one  experiment  of  which  I  have  any  knowledge 
resulting  from  such  legislation.  It  continued  in  force  just  four  years. 
In  1878  they  repealed  this  law  so  far  as  it  applied  to  freights;  they  left, 
however,  the  passenger  tariff  stand,  as  it  stands  to-day,  at  3,  3^,  and  4 
cents  per  mile.  Being  a  resident,  I  might  farther  say  that,  on  the 
repeal  of  this  statute,  they  adopted  a  Commissioners'  law,  providing  for 
the  appointment  of  three  Commissioners  by  the  Executive  Council  of 
the  Governor  and  the  heads  of  the  other  departments.  That  continued 
in  force  for  some  considerable  length  of  time,  and,  since  my  removal  to 
the  State  of  California,  some  ten  years  ago,  they  provided  for  the  elec- 
tion of  these  Commissioners  by  the  people,  as  is  done  in  the  State  of 
California.  I  remember  very  distinctly  the  result  of  this  legislation 
in  that  State.  It  resulted  in  a  complete  cessation  of  railroad  building 
in  the  State  of  Iowa,  and  other  results  that  statistics  will  probably  fur- 
nish to  your  committee.  It  was  repealed  without  objection.  The 
people  of  the  State  of  Iowa  were  so  well  satisfied  with  it  that  it  was 
done  without  a  ripple  on  the  public  surface.  I  will  endeavor  to  ascer- 
tain in  the  State  Library  here  the  mileage  of  railroads  built  some  four 
or  five  years  preceding  the  passage  of  this  law,  and  the  railroad  build- 
ing in  that  State  during  the  pendency  of  this  statute  and  the  repeal  of 
it.  AVhile  I  have  not  yet  had  an  opportunity  to  get  it,  I  will  endeavor 
to  furnish  it  to  the  committee  before  the  close  of  your  session. 

Mr.  Earl:  Have  you  compared  the  schedules  therewith  the  proposed 
schedule,  Mr.  Collier?  A.  I  have  not.  I  am  not  capable  of  making 
such  a  comparison.  It  is  outside  of  my  profession.  It  is  here,  all  in 
detail,  and  complete,  in  this  statute,  which  you  can  examine,  or  have 
comparisons  made.  I  could  not  make  such  a  comparison,  because  it  is 
not  within  my  experience.  I  stated  this  matter  here  because  I  believe 
it  to  be  one  of  the  best  and  most  satisfactory  arguments,  especially  to 
gentlemen  accustomed  to  basing  their  conduct  on  occasions  upon  prece- 
dents. I  believe  it  speaks  louder  in  regard  to  the  question  of  the  expe- 
diency and  propriety  of  legislation  of  this  kind  than  anything  we  can 
suggest,  to  show  an  instance  of  this  kind  where  it  was  tried  and  where 
it  failed,  and  where  they  have  returned  again  to  the  Commissioner  sys- 
tem.    And  if  you  will  examine  the  statutes  of  the  State  of  Iowa  since 


—  61  — 

that  time,  and  especially  the  lawsof  the  Twenty- second  General  Assem- 
bly, you  will  find  the  most  recent  legislation  in  that  State  upon  this 
subject,  where  they  have  gone  on  amending,  changing,  and  modifying, 
sometimes  in  the  interests  of  the  companies  and  sometimes  in  the  inter- 
ests of  the  people,  these  provisions  regulating  the  action  of  the  Railroad 
Commissioners,  until  they  have  made  very  decided  advances  in  that 
particular  direction,  and  so  corrected  the  matter  that  the  people  and  the 
railroad  companies  seem  to  be  in  entire  harmony.  I  say  this  from  my 
knowledge  of  the  condition  of  things  there,  being  a  native  of  that  State 
and  still  keeping  up  very  friendly  interests  there. 

Mr.  Earl:  Has  competition  there  not  allayed  this  irritation  more 
than  anything  else?  A.  I  am  glad  you  suggested  that  question.  At 
the  time  of  the  adoption  of  this  law,  in  1874,  as  I  now  recollect,  the 
Chicago,  Burlington,  and  Quincy  road  extended  clear  across  the  State- 
of  Iowa  in  one  tier  of  counties;  the  Chicago,  Burlington,  and  Northern 
extended  clear  across  the  State  in  another  tier  of  counties;  the  Chicago 
and  Northwestern  extended  clear  across  in  another  tier;  the  Illinois 
extended  nearly  across  in  another  tier  of  counties;  and  the  Chicago, 
Milwaukee,  and  St.  Paul  road  clear  across  in  another  tier  of  covinties. 
I  think  all  of  these  lines  of  roads  reached  from  the  easterly  to  the  west- 
erly line  of  the  State,  unless  the  Illinois  Central,  which  was  afterwards 
built.  There  was  competition  there.  At  the  same  time  the  Cedar 
Rapids  road  reached  to  the  north  of  the  State,  running  into  Minnesota; 
the  Central  Railroad  of  Iowa  reached  frnm  Ottumwa  to  the  north  line 
of  the  State;  and  the  Keokuk,  Fort  Des  Moines,  and  Minnesota  reached 
from  the  Mississippi  River  to  Fort  Dodge;  and  other  branch  lines  of 
road  radiated  out  from  these  lines  in  every  direction  as  feeders.  There- 
fore, you  will  see  there  was  active  competition  at  the  time  of  the  adop- 
tion of  this  statute.  Still,  after  an  experience  of  four  years,  finally,  to 
sum  up,  finding  the  unyielding  condition  of  things  under  an  arbitrary 
fixed  statute  made  it  impossible  to  adapt  themselves  to  any  conditions 
that  arise  between  the  meetings  of  the  Legislature,  the  people  and  the 
railroads  consented,  because  there  was  no  objection  to  it — I  remember 
very  distinctly  at  the  time — consented  to  wipe  out  that  fixed  tariff. 


Mr.  D.  Freeman, 

Of  Los  Angeles,  spoke  for  the  Southern  California  Railroad  as  follows: 
Mr.  Chairman  and  Gentlemen:  I  appear  before  you  not  only  as  a 
representative  of  the  Southern  California  Railway  Company,  of  which  I 
am  a  Director,  but  as  a  shipper  and  payer  of  freight  to  a  large  extent. 
To  show  you  that  I  am  interested  in  cheap  freights,  I  will  state  that  the 
freight  I  will  have  to  pay  during  1893  on  the  fruit,  grain,  and  bricks 
from  my  rancho  near  Los  Angeles  will  amount  to  about  $87,000.  I  con- 
tributed largely  to  the  building  of  a  railway  from  Los  Angeles  to  the 
Pacific  Ocean,  which  now  forms  part  of  the  Southern  California  Rail- 
way system,  and  I  have  been  for  years  doing  all  in  my  power  to  get  a 
road  built  from  the  present  terminus  of  either  the  Rio  Grande  and 
Western  or  the  Union  Pacific  in  southern  Utah  to  Los  Angeles.  I 
should  also  be  glad  to  see  the  Santa  Fe  system  extended  to  San  Fran- 
cisco.    I  tell  you  these  things  so  that  you  may  know  that  I  do  not 


—  62  — 

speak  as  one  having  no  experience  and  no  interest  in  legislation' per- 
taining to  railways  and  freights. 

I  came  to  Los"^  Angeles  twenty  years  ago,  when  she  had  no  railway 
connections  with  San  Francisco  or  the  East.  I  have  seen  that  country 
grow  from  a  barren  plain  covered  by  sheep  and  cattle  to  one  of  the  most 
fertile,  favored,  and  prosperous  parts  of  the  United  States.  And  this 
prosperity  and  growth  have  been  largely  brought  about  by  the  build- 
ing of  railways  connecting  us  by  two  great  lines  with  the  Eastern 
and  Central  States,  and  giving  us  four  shipping  points  on  the  ocean, 
instead  of  but  one,  as  in  former  days.  Before  the  advent  of  the  rail- 
ways, I  paid  nearly  .$5  per  ton  to  put  barley  on  board  ship  at  San 
Pedro.  I  can  put  grain  on  board  ship  now  for  -$1  10  per  ton.  Therefore 
it  is,  that  looking  at  all  the  benefits  the  railways  have  conferred  upon 
California,  and  seeing  that  we  need  other  competing  lines,  I  think  it 
unwise  to  pass  any  law  that  will  cripple  the  railroads  now  in  operation 
in  this  State,  or  prevent  the  building  of  the  other  lines  we  so  badly 
need.  In  my  attempts  to  get  the  road  from  Los  Angeles  to  Utah  under 
way,  I  have  had  to  consult  capitalists  who  might  be  induced  to  buy  the 
bonds  of  the  road;  and  there  has  been  received  from  all  of  these  men 
one  universal  answer,  "  The  danger  of  unfriendly  legislation  and  disas- 
trous interference  with  freights  and  fares,  render  railway  bonds  an 
unsafe  investment." 

A  gentleman  came  from  Salt  Lake  City  last  week  to  aid  us  in  our 
scheme  for  the  Utah  road,  but  it  was  agreed  on  all  hands  that  if  this 
proposed  bill  became  a  law,  we  must  abandon  the  project;  not  only  that, 
but  it  will  prevent  the  building  of  a  railway  from  Mojave  to  San  Fran- 
cisco. Similar  legislation  to  this  proposed,  was  tried  in  Iowa  five  years 
ago,  and  it  resulted  disastrously  to  the  public  and  the  railroad  people. 

During  the  time  this  law  was  in  force,  railway  building  was  prac- 
tically suspended  all  over  the  State.  Now,  it  is  proposed  to  apply  to 
the  railways  in  California  a  tariff  considerably  lower  than  the  tariffs 
now  in  force  in  Kansas,  Illinois,  and  Iowa.  But  the  railway  conditions 
are  totally  different  in  California  to  what  they  are  in  those  States. 
Look  at  the  profiles  of  the  Atlantic  and  Pacific,  the  Southern  California, 
and  the  Southern  Pacific  Railways  in  California,  and  compare  them 
with  the  profiles  of  the  roads  through  Illinois,  Iowa,  and  Kansas. 
Illinois  and  Iowa  are  practically  level  countries.  You  will  see  that 
from  Chicago  to  Kansas  City  the  line  is  practically  level,  while  from 
Kansas  City  to  the  western  border  of  the  State  of  Kansas  the  elevation 
is  but  slight,  and  is  gradual  and  the  grades  are  easil}'  overcome;  and 
you  will  notice  that  as  soon  as  the  railway  leaves  the  State  of  Kansas 
expensive  mountain  climbing  commences,  and  from  there  to  the  Pacific 
Ocean  it  is  but  one  interrupted  climb,  first  up  a  mountain  on  one  side 
and  then  down  it  on  the  other.  It  goes  up  at  the  Continental  Divide 
to  a  height  of  nearly  a  mile  and  a  half  above  sea-level,  then  down 
nearl}^  a  half  mile  to  Springer,  and  so  on  up  half  a  mile  and  down 
half  a  mile  five  times,  till  you  come  to  Flagstaff,  and  from  Flagstaff  to 
the  Needles  down  again  six  thousand  four  hundred  feet,  and  then  up 
again  four  thousand  feet  to  the  Cajon  Pass,  then  down  to  the  San 
Bernardino  Valley.  This  climbing  up  and  down,  as  you  know,  is  only 
done  by  long  and  circuitous  routes,  and  the  building  of  a  railway  over 
a  mountain  range  is  very  expensive.     It  frequently  happens  that  to 


—  63  — 

ovei;come  a  distance  of  one  mile  more  money  has  to  be  expended  than 
on  twenty  miles  in  the  plain  below. 

Then,  again,  the  railways  in  Illinois,  Iowa,  and  Kansas  run  directly 
over  the  coal  fields,  and  coal  in  these  States  can  be  bought  at  less  than 
one  quarter  what  it  costs  in  California. 

Ag-ain,the  soil  of  Illinois,  Iowa,  and  Kansas  is  universally  fertile,  and 
these  States  are  well  settled.  But  on  the  Atlantic  and  Pacific  Railway 
from  Alburquerque  to  San  Bernardino,  a  distance  of  nearly  one  thou- 
sand miles,  the  country  is  but  sparsely  settled,  and  for  nearly  half  that 
distance  the  road  passes  over  a  desert,  or  partially  desert,  country, 
affording  no  local  freight  or  passengers  to  add  to  the  revenue  of  the 
railway. 

In  Illinois  85  per  cent  of  all  the  land  lies  within  five  miles  of  a  rail- 
way, and  there  is  but  1  per  cent  of  all  the  land  in  that  State  that  is 
between  fifteen  and  twenty  miles  of  a  railway.  Wages  paid  to  railway 
employes  in  all  States  east  of  the  Rocky  Mountains  are  much  less  than 
those  paid  on  this  coast.  Confining  ourselves  to  the  State  of  California, 
we  find  that  of  the  three  hundred  and  ten  miles,  between  the  Needles 
a,nd  Los  Angeles,  two  hundred  and  fifty  of  these  miles,  between  the 
Needles  and  the  foot  of  the  Cajon  Pass,  run  over  a  desert  country. 

The  Eastern  States  above  referred  to  have  all  the  railways  they  need; 
they  are  gridironed  with  them;  coal  is  cheap  and  wages  are  low.  But 
we  in  California  have  not  one  quarter  of  the  railways  we  need,  and  the 
only  way  we  can  get  them  is  to  encourage  railroad  companies  and  not 
hamper  them.  People  talk  sometimes  as  if  the  railway  companies  were 
coining  money  out  of  the  needs  of  the  people.  But  few  of  the  Western 
roads  are  paying  dividends.  Take  three  of  the  roads  forming  the  Santa 
Fe  System.  The  Atchison,  Topeka,  and  Santa  Fe  Railway  Company 
have  $102,000,000  capital  stock,  upon  which  but  three  small  dividends 
have  been  paid  within  the  past  eight  years.  The  Atlantic  and  Pacific 
have  $80,000,000  tied  up  in  their  road  upon  which  no  dividends  have 
been  paid.  The  Southern  California  has  invested  $13,000,000  in  South- 
ern California,  on  which  no  dividends  have  been  paid.  Is  it  fair  to  the 
men  who  have  built  these  roads,  at  this  enormous  and  unremunerative 
outlay,  and  have  added  so  largely  to  the  prosperity  of  California,  to  ask 
them  to  accept  rates  of  freight  and  fares  for  their  expensive  roads  simi- 
lar to  those  in  force  in  the  old,  well-settled,  and  level  coitntries,  where 
cheap  coal  exists  and  lower  wages  prevail,  and  no  obstructions  to  cheap 
railway  construction  appear,  and  where  all  supplies  for  railway  con- 
struction and  maintenance  are  cheap? 

California  is  badly  cut  up  by  mountain  ranges,  and  with  the  excep- 
tion of  Colorado,  it  presents  more  obstacles  to  railway  construction  and 
operation  than  any  other  State  in  the  Union.  Then  again,  it  is  sparsely 
settled.  In  that  part  of  the  State  in  which  the  Southern  California 
Railway  operates,  there  are  but  five  people  to  the  square  mile,  while  in 
Kansas  there  are  eighteen,  and  in  Illinois  nearly  seventy  to  the  square 
mile.  Only  about  one  quarter  of  the  land  in  the  State  is  sul^ject  to 
cultivation.  The  rest  is  desert  or  mountains.  Illinois  and  Iowa,  on 
the  other  hand,  have  less  than  5  per  cent  of  untillable  land,  and  Kansas 
less  than  9  per  cent. 

And  now  in  conclusion,  what  would  be  the  condition  of  California 
to-day  without  her  railroads?  The  railroads  have  done  more  than  any 
other  factor  in  bringing  about  our  present  prosperity.    We  are  too  much 


—  G4  — 

inclined  to  overlook  the  benefits  we  have  derived  and  are  deriving  from 
our  railways.  We  need  more  of  them.  Let  us  encourage  the  building 
of  new  roads.  Plenty  of  roads  and  plenty  of  competition  will  regulate 
freights  and  fares  much  better  and  more  equitably  than  legislation  will. 
This  continued  agitation  and  legislation  on  this  question  has  a  tendency 
to  unsettle  values  and  prevent  the  building  of  new  roads,  and  is  bad  for 
the  State. 

I  am  satisfied  that  if  the  proposed  tarifl'  becomes  a  law,  it  will  have 
the  effect  of  not  only  putting  a  stop  to  all  railroad  building  in  Cali- 
fornia, but  many  of  the  short  roads,  now  used  principally  as  "  feeders" 
to  some  of  the  larger  systems,  will  cease  to  be  operated.  The  whole 
effect  will  be  bad  for  the'  railroads,  and  worse  for  the  people. 

Committee  met  January  31st,  at  7:30  p.  m. 


Statement  of  C.  O.  Johnson. 

(Representing  the  Pacific  Coast  Ptailway.) 

Mr.  Chairman  and  Gentlemen:  It  will  not  take  much  time  for  me 
to  make  my  statement,  and  I  would  like  to  be  heard  to-night.  I  repre- 
sent the  Pacific  Coast  Railway.  While  our  earnings  are  something 
under  the  $4.U00  limit,  yet,  we  are  advertising  our  section  and  produc- 
tions of  the  soil  along  our  line,  having  great  hopes  of  its  future 
growth  and  a  corresponding  increase  in  earnings.  We  also  have  in 
mind  now,  a  prospective  extension  into  the  easterly  interior  valleys; 
and  when  these  are  accomplished  we  may  expect  to  increase  our  gros& 
earnings  to  or  beyond  $4,000  per  mile.  The  adoption  of  the  proposed 
amendment  now  under  discussion  would  work  an  injustice  to  our 
owners,  preventing  a  fair  remuneration  and  the  further  investment  of 
capital  necessary  for  such  extensions,  and  it  would  result  in  our  sitting 
down  and  quietly  closing  up,  as  soon  as  we  have  worked  up  $3,999 
per  mile,  and  studying  to  prevent  our  earnings  going  beyond  that  figure,. 
80  that  our  owners  may  at  least  enjoy  a  small  net  earning  that  now 
accrues  to  them,  and  not  decrease  these  net  earnings  by  further  exten- 
sions or  increase  in  business.  I  have  been  in  the  railroad  business  for  the 
past  twenty-one  years,  thirteen  years  of  which  time  as  freight  agent 
and  at  the  heads  of  the  various  departments  in  the  service.  My  expe- 
rience commenced  prior  to  the  inauguration  of  the  Interstate  Commerce 
Act,  and  prior  to  the  adoption  by  the  various  States  of  supervision  by 
Commissions  of  railroad  rates  and  fares.  Naturally  I  am  opposed  to 
any  supervision  except  those  whose  money  is  invested  in  the  plant 
or  the  owners  themselves;  but  if  you  can  and  must  supervise  these 
matters,  then  in  all  justice  to  the  capitalists  do  so  reasonably,  and 
then  you  will  improve  your  transportation  facilities,  thereby  bringing 
about  regulation  in  rates  and  service.  I  say,  in  justice  to  these  people, 
give  them  a  fair  and  just  supervision  by  an  honest,  fair-minded 
Board  of  Railroad  Commissioners,  made  up  of  men  with  some  experi- 
ence in  the  business.  This  supervision  cannot,  in  my  judgment,  be  just 
as  well  made  by  a  temporary  Act  of  your  Assembh%  as  a  clear  study  of 
the  peculiar  conditions  of  the  details  of  railroading  in  this  State  must 


—  65  — 

be  made;  the  cost  of  fuel  and  the  heavy  grades  limiting  the  number  of 
cars  each  engine  can  pull;  the  cost  of  labor,  also  figures.  When  you 
pull  a  loaded  car  over  the  line  you  must  bring  it  back  empty.  It 
requires  much  study  and  personal  inspection,  which  a  temporary  Act 
cannot  give.  The  just  remedy  then,  in  my  judgment,  is  a  Board  of 
Commissioners  composed  of  fair-minded,  experienced  men,  whose  super- 
vision shall  be  such  that  no  objection  can  be  made  on  the  part  of  the 
State,  the  people,  or  the  railroad. 

In  our  particular  case  the  facts  are:  Our  road  was  incorporated  in 
September,  1882,  under  the  laws  of  the  State  of  California,  and  was  built 
in  sections.  The  actual  cost  of  the  road,  the  full  amount,  was  $972,827; 
interest  on  this  amount  at  a  rate  of  4  per  cent  would  be  $118,913. 
The  net  earnings  of  the  road  have  never  reached  anything  near  these 
figures.  Our  average  gross  earnings  per  annum  for  the  last  four  years 
were  $174,949,  while  the  net  for  1892  was  only  $61,727.  The  average 
gross  earnings  per  mile  for  the  past  four  years  was  $2,636;  the  gross 
for  1892  was  $2,397.  The  average  net  earnings  per  mile  for  the  past 
four  years  was  $989;  net  for  1892,  $812.  The  average  compensation  to 
all  employes,  including  general  otlicers,  was  $2  03  per  day;  the  average 
in  Kansas,  Nebraska,  and  Missouri  was  about  $1  60  per  day,  as  shown 
by  statistics.  Fuel  for  locomotives  cost  us:  coal,  $10  per  ton;  wood, 
$5  50  per  cord,  which  on  the  basis  of  one  and  one  half  cords  per  ton  of 
coal,  makes  the  value  of  wood  $7  75  per  ton;  this  is  against  $1  40  to 
$1  50  per  ton  for  Kansas  and  Nebraska.  I  know  this  is  a  fact,  because 
I  operated  in  Missouri  and  Kansas.  Maintenance  of  waj'  and  bridges 
cost  $32,578  for  1892.  Our  line  crosses  three  divides  at  about  equal 
distances.  The  grades  are  heavy  going  north  or  south;  these  grades 
vary  from  one  hundred  and  five  to  one  hundred  and  eighty  feet  to  the 
mile.  In  three  cases  these  are  over  two  miles  long,  in  one  case  three 
miles,  and  in  another  four  miles  long.  There  is  a  difference  between 
short  grades  and  a  rapid  ascent  and  ascending  the  same  distance  in 
long  distances.  You  will  find  it  is  a  greater  strain  upon  your  engines. 
Our  two  heaviest  engines,  and  tbey  are  as  heavy  as  our  forty-five  pound 
steel  will  bear,  cannot  pull  over  eight  loaded  cars  to  a  train;  the  lighter 
engines  pull  only  six  loads.  Our  conditions  are  such  that  we  are 
obliged,  for  economic  reasons,  to  haul  grain  on  flat  cars,  running  the 
risk  of  storms.  The  bulk  of  our  business  is  grain  and  beans,  and  is 
done  in  three  months  of  the  year.  This  necessitates  hauling  empty 
cars  one  way  over  long  distances,  and  empty  mileage  in  the  other  direc- 
tion, which  is  very  costly.  Another  element  we  have  to  contend  with 
which  does  not  exist  in  Kansas,  in  Nebraska,  or  in  any  other  State,  is 
the  factor  of  grass  on  the  track;  with  the  constant  work  of  section  men 
with  tliis  element  alone,  it  requires  four  months  so  the  road  can  be 
operated.  During  this  period  it  is  necessary  to  have  larger  gangs  of 
section  men,  and  two  thirds  of  the  maintenance  of  way  expense  for 
three  or  four  months  is  for  fighting  grass,  which  is  not  so  in  Kansas, 
Missouri,  or  Iowa.  It  is  claimed  ties  last  much  longer  in  this  country 
than  east  of  the  Rocky  Mountains.  This  is  not  proven  by  our  experi- 
ence. Eight  or  nine  months  of  the  year  it  is  very  dry,  and  we  have 
known  ties,  even  of  redwood,  to  be  afiected  by  dry-rot,  making  renewals 
frequent.  And  the  Southern  Pacific  Company's  line  is  now  under  con- 
struction to  Santa  Barbara  and  will  parallel  our  line  for  a  long  distance, 
running  between  us  and  the  ocean;  this  will  make  our  entire  line 
5 


—  66  — 

strongly  competitive.  Their  expense  of  operating  is  less  on  the  long 
lines  than  ours  on  the  shorter,  on  account  of  our  general  officers.  And 
we  could  not  operate  under  the  proposed  figure  with  competition  of  the 
Southern  Pacific.  We  would  have  to  make  a  reduction  of  71  per  cent 
on  the  principal  commodities.  Our  average  revenue  on  passengers  in 
1891  was  4  cents,  while  the  average  cost  of  carrying  a  passenger  one 
mile  was  3  cents.  We  have  tried  the  experiment  of  reduced  rates,  but 
with  no  success,  and  I  respectfully  submit  that  this  would  bankrupt 
the  road  and  prevent  future  extensions  of  the  line. 


Statement  of  J.  F.  Kidder. 

(Representing  Nevada  County  Narrow  Gauge  Railroad.) 

Mr.  Chairman  and  Members  of  the  Committee  on  Constitutional  Amend- 
ments of  the  Senate  of  the  State  of  California: 

Gentlemen:  As  President,  Manager,  and  Chief  Engineer  of  the 
Nevada  County  Narrow  Gauge  Railioad,  I  desire  to  present  to  you 
sout;  of  the  characteristics  of  that  road,  and  to  give  my  reasons  why  the 
bills  now  before  your  committee,  in  my  humble  opinion,  should  be 
reported  back  to  the  Senate,  with  the  recommendation  that  they  do  not 
pass. 

The  road  extends  from  Colfax,  a  station  on  the  line  of  the  Central 
Pacific,  through  Grass  Villey  to  Nevada  City,  total  distance  twenty- 
two  and  one  half  miles,  over  a  broken  and  rugged  country,  situated 
among  the  foothills  of  the  Sierra  Nevadas. 

The  distance  from  Colfax  to  Grass  Valley  in  an  air  line  is  nine  miles, 
whilst  by  rail  it  is  seventeen  miles;  from  Grass  Valley  to  Nevada  City, 
by  an  air  line,  three  and  one  half  miles,  by  rail  five  and  one  half  miles. 
It  being  impossible  to  construct  the  road  on  a  shorter  line  without  in- 
creasing the  gradients  above  one  hundred  and  twenty-one  feet  to  the 
mile,  which  is  the  maximum  used  on  our  line. 

Our  curvature  is  very  sharp,  the  minimum  radius  being  about  two 
hundred  and  eighty  feet,  total  curvature  being  over  7,600  degrees,  or 
over  twenty-one  full  circles;  total  length  of  curve  line  is  12.26  miles, 
and  tangent  or  straight  line,  10.24  miles. 

The  sum  of  ascending  grades  from  Colfax  to  Nevada  City  is  1,158 
feet,  the  aggregate  length  of  same  12.16  miles,  an  average  of  over  95 
feet  per  mile;  the  sum  of  descending  grades  between  the  same  points  is 
1,049  feet,  the  aggregate  length  of  same  9.66  miles,  an  average  of  over 
108  feet  per  mile,  whilst  the  total  length  of  level  grade  is  .68  of  a 
mile. 

The  elevation  above  sea-level  of  various  points  on  the  line,  located  in 
the  order  as  placed  in  the  list,  is  as  follows: 

Colfax,  2,414  feet;  Bear  River,  2,076  feet;  Green  Horn,  2,152  feet; 
Kress  Summit,  2,851  feet;  Grass  Valley,  2,448  feet;  Town  Talk  Summit, 
2,771  feet;  Nevada  City,  2,-525  feet. 

The  following  comparative  table,  showing  the  gross  earnings  and 
the  expenses  of  operating,  including  taxes,  interest  on  bonded  indebted- 
ness, and  amount  expended  in  construction  from  1880  to  1891,  inclu- 


—  67 


sive,  will  be  found  of  interest,  as  showing  the  fluctuation  of  business  and 
the  decrease  of  same  by  the  stoppage  of  hydraulic  mining: 


Year. 

Gross 
Receipts. 

Expenses. 

Profit. 

Loss. 

1880       

$115,655  55 

116,465  91 

105,273  20 

100,978  07 

84,861  66 

89,133  21 

98,247  63 

94,411  49 

89,211  89 

84,978  69 

87,259  49 

89,196  18 

$94,800  72 
98,667  21 

106,924  71 

101,571  76 
82,139  04 
91,319  98 

102,752  50 
88,973  70 
80,783  90 
94,472  50 
96,655  47 
88,893  21 

$20,854  83 
17,798  70 

* 

1881 

18S2 

$1,651  51 

1883    -  

593  69 

1884 

2,722  62 

1885 

2,186  77 

18S6 

4,504  87 

18S7 — 

5,437  79 
8,427  99 

1888 

1889. 

9,493  91 

1890 

9,395  98 

1891 

302  97 

Our  statement  for  1892  has  not  yet  been  completed,  as  our  annual 
meeting  does  not  take  place  until  April.     Of  the  expenses  incurred  in 

1882,  renewal  of  bridges  amounting  to  over  $11,000  Avere  included;  in 

1883,  renewal  of  bridges,  over  $16,000;  in  1889,  repairs  of  passenger 
coaches,  over  $3,000,  and  new  buildings  and  works,  over  $3,000  more, 
and  in  1890  the  expenses  of  snow  blockade  were  nearly  $9,000. 

In  regard  to  the  economy  of  the  management,  I  would  simply  state 
that  the  salaries  of  the  general  officers  are  low,  each  one  filling  two  or 
three  offices,  and  there  is  not  even  a  clerk  in  any  one  of  these  depart- 
ments. 

The  amount  of  wood  used  in  the  service  of  the  road  is  about  two 
thousand  cords  annually,  costing  $3  50  per  cord.  The  supply  is  becom- 
ing short,  and  I  will  soon  have  to  build  a  branch  of  three  or  four  miles 
to  obtain  a  supply. 

Regarding  the  increase  of  travel  by  reducing  rates,  I  would  offer  the 
following  pertinent  example:  Our  regular  passenger  rate  between  Grass 
Valley  and  Nevada  City  is  50  cents,  and  the  public  were  very  anxious 
that  I  should  try  the  experiment  of  a  local  at  half  rates.  So,  in  order 
to  satisfy  them,  I  established  a  double  daily  service  in  1884  between 
those  points,  running  at  such  hours  as  would  best  satisfy  the  traveling 
public,  and  placing  the  fare  at  25  cents,  with  the  result  that  at  the  end 
of  four  months  our  receipts  had  averaged  $3  90  a  day,  and  our  expenses 
had  been  over  $11  a  day. 

The  gentleman  representing  the  Traffic  Association  of  San  Francisco 
has  gravely  informed  you  that  railroads  should  be  operated  in  California 
cheaper  than  in  other  portions  of  the  United  States,  for  the  following 
reasons:  On  account  of  the  equable  climate,  on  account  of  our  roads 
not  being  ballasted  with  rock  ballast,  and  on  account  of  the  durability 
of  our  timber^ permitting  our  worn-out  ties  to  be  used  for  fence  posts. 
Permit  me  to  state,  for  his  benefit,  that  in  Nevada  County  we  have  as 
high  as  one  hundred  and  fifteen  inches  of  rain  in  six  months,  our  aver- 
age rainfall  per  annum  being  about  sixty  inches. 

And  it  strikes  me  very  forcibly  that  if  the  one  hundred  and  fifteen 
inches  of  rain  should  fall  in  his  States  of  Iowa  and  Kansas,  that  he 
would  not  be  obliged  to  apply  to  the  Legislatures  of  those  States  to 
wreck  the  railroads,  but  would  rather  have  to  search  the  Gulf  of  iMexico 
for  the  remains.     On  January  12,  1890,  a  storm  commenced  and  snow 


—  (58  — 

fell  to  a  depth  of  five  feet,  blocking  the  road  till  the  25th  of  the 
same  month;  and  on  February  18th,  another  storm  deposited  snow  to 
about  the  same  depth,  causing  a  blockade  till  the  26th.  The  cost  tO' 
the  road  of  attempting  to  raise  these  blockades  was  nearly  {}'9,000.  Of 
course  it  is  apparent  to  any  one  that  it  is  cheaper  to  operate  roads  in 
0alifornia  than  anywhere  else.  To  his  second  reason,  I  would  answer 
that  our  road  is  ballasted  with  rock  ballast  taken  from  one  thousand 
five  hundred  to  two  thousand  feet  below  the  surface  of  the  earth,  and 
still  it  does  not  take  one  of  our  section  hands  a  whole  day  to  remove 
and  replace  three  ties,  as  the  gentleman  thought,  and  so  expressed  him- 
self, it  did  on  some  of  the  roads  in  the  East,  with  which  he  was  famil- 
iar; a  remark  which  I  am  afraid  would  subject  him  to  the  ridicule  of  all 
the  trainmen  in  the  United  States. 

Answering  his  statements  about  the  durability  of  timber,  let  me 
give  you  an  example:  In  1875  we  completed  two  spans  of  Howe  truss 
bridges,  one  hundred  and  sixty  feet  each  in  length,  and  in  1882  and 
1883  we  were  compelled  to  rebuild  the  same  entirely,  as  the  timber  was 
so  rotten  as  to  be  unsafe.  These  bridges  were  kept  well  painted.  I  have 
put  redwood  planks  four  inches  thick  under  the  subsills  of  our  trestle 
bridges,  and  in  three  years  have  haa  to  replace  the  same,  as  they  were 
so  rotten  as  to  be  nothing  but  punk.  The  acid  in  the  red  soil  of  the 
foothills  decays  timber  faster  than  in  any  other  section  with  which  I 
am  familiar;  and  instead  of  being  able  to  sell  our  removed  ties  for  fence 
posts  or  fuel,  we  collect  and  burn  them  as  we  would  brush  to  get  rid  of 
them. 

Does  it  not,  to  say  the  least,  seem  presumptuous  in  the  Manager  of 
the  Traffic  Association,  after  a  residence  of  one  short  year  on  this  coast, 
to  formulate  a  bill  for  the  government  of  thirty  roads  of  this  State, 
when  he  coolly  informed  you  that  he  has  not  inquired  into  the  charac- 
teristics, or  applied  for  any  information  in  reference  to  any  line  save 
and  excepting  the  Southern  Pacific  Company?  In  other  words,  if  he 
can  only  cinch  that  company  he  cares  not  how  the  other  roads,  repre- 
senting millions  of  capital,  may  be  affected.  It  was  a  very  easy  matter 
to  find  out  all  about  the  outside  roads,  from  the  sworn  statements  on 
file  with  the  Railroad  Commissioners  of  this  State;  and  if  he  could  only 
find  time  in  one  yea.Y  to  formulate  a  bill  to  regulate  the  Southern  Pacific 
Compan}^,  and  incidentally,  without  examination,  the  other  twenty-nine 
roads  of  California,  how  can  it  be  expected  that  the  Legislature  of  Cal- 
ifornia, in  a  session  of  sixty  days,  and  with  some  other  little  business 
before  it,  can  give  this  matter  such  attention  as  to  do  justice  to  all  con- 
cerned? 

In  conclusion,  I  would  state,  as  you  have  already  been  informed  by 
our  attorney,  that  we  stand  upon  our  special  charter,  and  certainl}'-  will 
submit  to  no  interference  with  the  same  until  the  question  has  been 
decided  by  the  highest  tribunal  in  the  land.  But  I  woul4  ask,  is  it  fair 
or  just;  for  the  Legislature  of  the  State  of  California,  after  entering  into 
a  special  contract  with  the  promoters  of  this  enterprise,  guaranteeing 
to  them  rates  of  freights  and  fares,  without  which  they  would  not  have 
invested  their  money,  to  now  force  us  to  the  expense  and  annoyance  of 
defending  our  charter  before  the  Courts? 

I  thank  you,  Mr.  Chairman,  and  gentlemen  of  the  committee,  for 
your  courtesy. 


—  69  — 

Statement  of  J.  F.  Burgin. 

(Representing  San  Francisco  and  North  Pacific  Railway.) 

Gentlemen:  In  the  open  session  of  the  California  Senate,  bills  are 
introduced  right  and  left  on  all  subjects.  Some  are  inspired  by  good 
motives,  some  inspired  by  selfish  motives,  and  many  from  mistaken  aod. 
ill-considered  ideas. 

Little  time  can  be  given  to  the  discussion  of  the  subject  there;  but  the 
people  of  the  State  of  California,  as  a  body,  cannot  take  evidence  and 
-decide  these  questions;  the  Senate  is  expected  to  do  this  in  their  sphere. 
The  Senate  here  stands  between  the  temper  of  certain  classes  on  the 
one  hand,  and  the  property  rights  of  her  citizens  and  corporations  on 
the  other;  and  the  quintessence  of  this  responsibility  is  put  upon  you 
gentlemen  of  this  committee,  as  far  as  the  railroad  legislation  is  con- 
■cerned. 

On  behalf  of  the  San  Francisco  and  North  Pacific  Railway  Company, 
better  known  as  the  "  Donahue  line,"  I  wish  to  claim  only  a  few  minutes 
•of  your  time  to  lay  before  you  certain  facts  and  certain  evidences  which, 
independent  of  all  public  clamor,  must  bear  their  ligitimate  weight 
■when  you  come  to  conclude  the  open  controversies  this  proposed  bill  has 
■brought  up. 

Inthe  first  place,  I  represent  a  railroad  of  a  total  mileage  of  one 
hundred  and  sixty-five  miles.  It  runs  from  Point  Tiburon,  in  Marin 
■County,  to  Ukiah,  in  Mendocino  County,  and  by  branches  to  other 
points,  and  is  a  standard  gauge  railroad.  This  railroad  would  be 
severely  affected  by  the  proposed  bill.  The  North  Pacific  Coast  Rail- 
way, with  a  mileage  of  eighty-seven  miles,  will  be  similarly  atfected; 
so  will  the  Eureka  and  Eel  River  Railroad,  of  thirty  miles,  and  all  the 
other  railroads. 

The  public  agitation  which  has  been  waged  against  the  Southern 
Pacific  Company  in  this  State  entirely  ignored  all  consideration  of  these 
smaller  railroads,  pro  or  con. 

It  aimed  its  political  javelin  at  the  Soutiiern  Pacific  Company,  with  its 
grand  aggregate  of  total  mileage,  which  is  greater  than  the  mileage  of 
all  the  smaller  railroads  put  together. 

A  law  designed  for  a  number  of  railroads  operated  in  one  system,  such 
as  the  Southern  Pacific  Company,  cannot  possibly  be  justly  applied  to 
the  short  distance  roads,  or  to  the  roads  operated  singly.  A  bill  that 
would  regulate  the  large  road  would  injuriously  discriminate  against 
the  short  roads,  and  a  bill  that  would  discriminate  against  the  large 
road  would  annihilate  and  close  up  the  short  roads  altogether. 

Now  I  will  state  a  few  facts  to  show  this  from  a  strictly  business 
vstandpoint.  I  do  not  propose  to  plead  poverty  on  behalf  of  the  Dona- 
Taue  properties,  but  simply  to  compare  the  result  of  our  present  opera- 
tions with  what  the  result  would  be  in  case  we  operated  our  road  under 
the  present  proposed  bill. 

The  building  of  our  road  cost  $7,090,059;  its  bonded  indebtedness  is 
$4,188,000.  The  necessities  of  the  case  compel  us  to  pay  interest  each 
year  on  our  mortgage  in  the  sum  of  about  $230,000;  all  this,  with  pay- 
ments to  our  sinking  fund,  must  come  from  our  net  profits.  If  we  did 
not  pay  it  out  of  our  net  profits  we  would  have  to  close  up  the  railroad 
altogether. 


—  70  — 

Now,  if  our  company  should  be  reduced  immediately  to  an  established 
rate  of  3  cents  or  less  per  mile  in  passenger,  and  to  a  freight  rate  as 
proposed  in  the  schedule,  what  would  the  consequence  be  to  us? 

Mr.  Leeds  has  stated  that  this  reduction  would  affect  the  Southern 
Pacific  Company  to  the  extent  of  25  per  cent  of  their  gross  earnings. 
We  will  show  that  the  reduction  to  our  company  would  be  near  50  per 
cent.  It  is  a  well  known  fact  that  the  comparative  expenses  of  a  small 
raih-oad  are  greater  than  those  of  a  larger  one,  over  a  corresponding 
distance.  But,  Mr.  Leeds  has  stated  that  a  25  to  30  per  cent  reduc- 
tion on  the  gross  earnings  of  the  Southern  Pacific  Company  would  be 
the  result  if  this  bill  should  become  a  law.  Apply  this  reduction 
instead  of  the  50  per  cent  reduction,  to  our  company,  and  what  would 
be  the  result? 

Under  the  favorable  auspices  of  the  past,  our  road's  earnings  for  the 
last  fiscal  year  show  a  surplus  of  $106,007,  after  paying  interest  and 
betterments.  If  the  road  had  been  run  under  the  regulations  of  the 
proposed  bill,  the  same  road,  with  the  same  economy,  and  the  same 
prosperity,  would  have  run  behind  that  year  .1-130,125  67,  and  would 
have  plunged  the  stockholders  in  debt  to  that  extent.  If  I  may  use  an 
old  expression,  "  figures  do  not  lie."  For  the  fiscal  year  ending  June 
30,  1892,  our  company's  gross  earnings  were  $886,471;  less  Mr.  Leeds* 
25  per  cent  reduction,  $221,619  75;  making  our  gross  earnings  only 
$664,978  92.  Now,  our  operating  expenses  and  interest  amount  to 
$794,978  92;  making  us  run  behind,  in  one  year  alone,  $130,125  67. 

Would  you,  gentlemen,  as  business  men,  like  to  make  an  investment 
in  the  stock  of  our  road  if  you  were  compelled  to  run  it  on  a  basis  of 
three  cents  a  mile,  and  with  the  proposed  freight  tariff,  knowing  that, 
no  matter  how  the  traffic  was  kept  up,  and  no  matter  how  smoothly 
things  ran,  your  final  balance  sheet,  which  formerly  showed  a  small 
profit,  would  then  alarm  you  with  a  great  annual  loss? 

Now,  as  far  as  the  people  of  the  State  of  California,  represented  in 
the  Senate  and  in  your  committee,  are  concerned,  they  do  not  ask  you 
to  regulate  the  freight  and  fares  of  the  Donahue  road;  the  people  do 
not  complain  of  our  rates;  the  people  do  not  want  our  rates  cut;  the  peo- 
ple do  not  want  this  proposed  bill,  as  far  as  our  road  is  concerned. 

Why,  even  the  shippers  on  our  line  of  road  are  not  complaining,  nor 
will  you  hear  from  our  passenger  traffic.  And  what  is  the  reason  of 
this?  Simply  because  the  people  in  the  districts  our  road  penetrates, 
want  our  train  service;  not  only  that,  they  want  more;  they  come  to  us 
from  the  north,  from  the  northeast,  and  from  the  northwest,  and  beg  us 
to  extend  our  road  and  come  to  their  relief.  They  all  realize  that  we 
are  not  able  to  reduce  our  rates  and  live;  they  pay  our  rates  cheerfully 
and  willingly.  They  would  rather  do  that  than  suffer  a  reduction  of 
train  service,  and  a  partial  loss  of  the  facilities  of  transportation,  which, 
of  course,  would  be  the  result  of  the  passage  of  this  bill. 

In  these  days  of  anti-railroad  agitation  it  may  seem  strange  to  you 
that  the  people  are  thoroughly  satisfied  with  our  rates.  I  may  as  well 
confide  in  you  a  portion  of  the  secret  history  of  the  road.  We  have  had 
only  two  complaints  filed  against  us  with  the  Railroad  Commissioners 
during  the  last  eight  or  nine  years  of  the  road's  operation;  the  charges 
were  dismissed;  it  was  found  that  the  same  individual  had  filed  both 
charges,  and  it  was  further  found  that  he  had  only  shipped  during  the 
whole  period  one  or  two  tons  of  freight,  and  he  himself  had  only  trav- 


—  Ti- 
ded over  the  road  twice,  and  on  one  of  those  occasions  he  traveled  on  a 
free  pass. 

You,  gentlemen,  have  already  heard  the  opinion  of  Mr.  Leeds  on  the 
subject.  I  cannot  call  it  testimony,  for  he  knows  no  facts;  he  simply 
gives  his  opinion;  it  is  entitled  to  no  greater  weight  than  the  opinion 
of  any  of  you  gentlemen  in  the  absence  of  facts  to  support  it.  Some  of 
his  assertions  are  not  universally  admitted;  for  instance,  in  the  case  of 
maintenance  I  do  not  agree  with  Mr.  Leeds'  assertion  that  the  cost  is 
less  in  this  State  than  in  the  State  Mr.  Leeds  uses  as  an  example  for 
establishing  the  rates  of  fare  and  freight  which  you  have  before  you  in 
the  printed  bill. 

In  this  State  much  greater  are  the  hire  of  labor,  the  cost  of  rails,  the 
cost  of  cars,  the  cost  of  locomotives,  the  cost  of  fixtures,  and  greater 
than  all  the  cost  of  coal.  The  cost  of  this  commodity  in  particular,  to 
us  ha»  been  on  an  average  $7  25  per  ton  (placed  ujion  our  locomotive 
tenders),  and  in  some  years  has  run  as  high  as  $14,  according  to  the 
condition  of  the  coal  market,  reaching  this  figure  in  1886,  the  cost  to 
the  Eastern  roads  being  from  75  cents  to  $1   50. 

Mr.  Leeds  has  stated  in  answer  to  a  question  from  your  honorable 
committee,  that  the  effect  of  the  reduction  of  these  rates  upon  the  inde- 
pendent roads  would  be  an  increase  in  travel.  M.  Leeds  in  his  answer 
did  not  state  his  reason  for  this  increase  of  business  to  the  roads  except 
the  reduction  of  rates.  I  would  like  to  call  the  committee's  attention  to 
the  fact  that  it  took  eighteen  years  for  the  Illinois  Central,  the  Pennsyl- 
vania Central,  and  the  Lake  Shore  and  Michigan  Southern,  to  come 
down  from  an  average  3  cent  to  an  average  2  cent  earning  per  mile, 
with  a  population  ten  times  as  great  as  that  of  this  State.  Yet  this 
bill  calls  for  an  immediate  reduction  and  allows  for  a  reduction  of  even 
less  than  2  cents  per  mile. 

Let  us  compare  the  population  of  the  State  of  California,  also  that  of 
the  counties  through  which  we  run,  with  the  several  Eastern  States 
which  operate  their  lines  upon  the  passenger  rates  and  freight  taritf 
like  unto  the  one  Mr.  Leeds  has  brought  forward  to  be  a  basis  for  the 
operation  of  the  roads  of  this  State.  Below  I  give  you  a  table  taken 
from  the  "Statistician"  of  1892: 


Population 

per 
Square  Mile, 


Square 
Miles. 


Inhabitants. 


Marin  County 

Mendocino  County 

Sonoma  County 

Lake  County 

California  _ 

Connecticut 

Illinois 

Indiana 

Massachusetts 

New  York 

Pennsylvania 

Ohio 


10 


10 

8 

150 

60 

65 
250 
150 
175 

90 


590 
3,694 
1,548 
1,125 


6,957 
158,360 

4,990 
56,650 
36,350 

8,315 
49,170 
45,215 
41,060 


18,072 

17,612 

32,721 

7,101 


70,506 
1,208,130 
746,258 
3,826,351 
2,192,404 
2,238,943 
5,997,853 
5,258,014 
3,672,316 


One  glance  at  these  figures  wall  show  you  why  roads  can  operate  with 
passenger  rates  in  the  States  enumerated  above,  with  the  exception  of 
this  State,  at  a  3  or  2  cent  rate,  and  even  less. 


—  72  — 

It  is  my  opinion  that  if  this  bill  should  pass  and  become  a  law,  this 
State,  instead  of  progressing,  would  retrograde.  It  is  the  ambition  of 
the  people  of  the  State  of  California  to  have  additional  railroad  com- 
munications with  the  East.  Do  you  think  that  in  the  face  of  adverse 
legislation  capitalists  will  expend  their  money,  when  they  see  that  they 
Avill  not  get  a  fair  return  of  interest  for  their  investment;  but,  instead, 
that  the  chances  are  greatly  that  it  will  be  a  losing  investment?  Mr. 
Leeds  has  said  before  you  that  people  sometimes  make  bad  investments. 

The  people  of  Humboldt  County  have  been  in  a  manner  isolated  from 
the  balance  of  the  State.  The  only  approach  to  their  county  is  by 
water,  over  one  of  the  most  dangerous  bars  on  the  coast,  or  by  stage  line 
overland  for  a  distance  of  one  hundred  and  fifty  miles.  They  have 
been  clamoring  for  a  railroad  communication.  It  will  take  several 
millions  of  dollars  to  make  this  desired  extension  from  the  terminus  of 
our  road.  This  county  has  only  a  population  of  twenty-five  thousand 
people.  Do  you  think,  gentlemen,  that  a  railroad  could  be  built  into 
this  new  county,  and  be  operated  upon  a  passenger  rate  of  2  cents  per 
mile,  or  even  3?  Do  you  think  that  this  railroad  could  be  operated 
upon  a  freight  basis  such  as  has  been  brought  forward  by  Mr.  Leeds, 
and  pay  the  interest  upon  the  investment? 

It  can  be  conclusively  shown  you  that  with  skillful  and  fostering 
care,  the  San  Francisco  and  North  Pacific  Railway  the  Donahue  rail- 
road, has  penetrated  the  fertile  valleys  of  Marin,  of  Sonoma,  and  of 
Mendocino,  and  if  the  Legislature  does  not  kill  railroad  enterprise  in 
these  counties  by  mistaken  or  hurriedly  considered  legislation,  this  rail- 
road will  pierce  the  neglected  forests  and  valleys  of  upper  Mendocino 
and  Humboldt  but  I  assure  you  they  will  never  get  there  on  2  cents  a 
mile  basis,  or  on  the  proposed  freight  tariff". 

I  think,  gentlemen,  that,  as  far  as  our  road  is  concerned,  I  can  leave 
this  matter  safely  in  your  hands,  for  if  I  quote  Mr.  Leeds'  answer  when 
your  honorable  committee  asked  him  what  effect  this  tariff"  would  have 
upon  the  independent  roads,  he  stated  he  had  never  examined  into  the 
costs  of  operation,  the  prospects  of  freight  and  of  travel,  or  the  condition 
of  the  country,  or  even  into  the  cost  of  the  construction  of  the  various 
railroads.  I  think  Mr.  Leeds,  himself,  has  already  given  a  negative 
answer  to  the  proposed  bill,  as  far  as  our  road  is  concerned. 


Statement  of  Thos.  Mellersh. 

(Of  the  San  Francisco  and  North  Pacific  Railway  Company). 

Mr.  Chairman  and  Gentlemen:  No  measure  has  ever  come  before  the 
Legislature  of  California  of  as  great  importance  to  the  road  I  am  here 
to  represent  as  the  present  amended  bill,  or  present  bill  before  the 
Legislature. 

It  would  be  fallacious  at  this  time  to  predict  how  far-reaching  it  may 
be,  but  the  measure  that  has  been  introduced  here  has  already  preceded 
us  and  has  gone  as  far  as  Chicago.  In  order,  gentlemen,  that  we  may 
fully  make  you  conversant  with  our  road,  and  what  we  have  to  give  you 
in  the  way  of  statistical  details,  I  would  like,  with  your  permission,  to 
present  you  each  with  a  copy  of  our  Annual  Report,  in  order  that  you 
may  more  clearly  follow  me. 


-^  73  — 

[Each  member  of  the  committee  was  here  presented  with  a  copy  of 
the  Annual  Report  of  the  San  Francisco  and  North  Pacific  Railway 
Company  for  the  year  ending  June  30,  1892.] 

Our  road,  gentlemen,  if  you  will  turn  to  the  first  page,  you  will  notice 
•commences,  you  will  find  by  the  map,  at  San  Francisco,  and  we  run  to 
Point  Tiburon,  emplo5dng  in  the  operation  of  ferriage,  three  steamers, 
one  of  which  was  burned  January  1st,  leaving  but  two.  From  Tiburon 
we  run  to  Ukiah,  north,  a  distance  of  one  hundred  and  six  miles,  and 
at  Ignacio  we  run  to  Glen  Ellen,  a  distance  of  thirty  miles,  east.  At 
Santa  Rosa  we  have  a  branch  to  Sebastopol,  and  from  Fulton  we  run  to 
Guerneville. 

The  total  mileage,  if  you  will  kindly  turn  to  the  first  page  in  the 
printed  matter  you  will  find,  is  one  hundred  sixty-four  miles  and  sixty- 
five  hundredths.  The  first  feature  that  we  would  like  to  ask  you  gentle- 
:men  to  ponsider,  is  one  of  the  factors  in  our  operating  expenses,  and  will 
be  found  on  page  forty-five,  table  F,  and  you  will  there  find  that  we  spend, 
this  little  company  of  ours,  the  amount  of  $19,810  23  per  year — the 
third  line — for  advertising.  Of  course,  you  will  say  this  advertising  is 
for  our  benefit.  We  grant  it,  but  in  order  that  we  may  bring  peojjle  to 
Oalifornia,  we  spend  a  good  deal  of  that  advertising  money  in  New 
York.  We  even  go  so  far  as  to  put  articles  in  New  York  papers.  We 
•even  go  so  far  as  to  print  books  and  circulars,  and  send  them  East  and 
'distribute  them,  and  we  do  not  stop  at  New  York;  we  cross  the  Atlantic 
Ocean  and  put  those  folders  and  papers  in  Germany.  Now,  gentlemen, 
if  people  come  here  from  such  remote  parts,  and  pay  us  the  fare  for 
traveling  over  our  road,  which  they  consider  reasonable,  I  do  not  think 
the  people  of  this  State  should  be  dissatisfied.  I  think  the  State,  gentle- 
men, gets  infinitely  more  benefit  than  we  do.  The  next  feature  I  will 
-ask  you  to  turn  to  now  is  on  same  page,  and  below  you  will  find  that 
the  cost  of  operating  our  steamers,  consisting  of  steamer  repairs,  steamer 
•expenses,  wages  of  crews,  and  dock  repairs,  and  fuel  for  steamers, 
amounts  to  $91,835  21.  But,  gentlemen,  the  expenses  do  not  stop  there. 
Whilst  we  show  that  as  being  the  cost  of  operating  our  steamers,  with 
your  permission,  Mr.  Chairman,  I  Avould  like  to  now  give  you  a  further 
statement. 

In  addition  to  the  actual  running  expenses,  $91,835  21,  as  shown  in 
that  statement,  you  will  find  that  we  pay  for  rent  of  slips  to  the  Har- 
bor Commissioners  $1,400  per  month,  amounting  to  $16,800  per  annum. 
Further,  we  pay  also  to  the  Harbor  Commissioners  for  switching  cars, 
75  cents  for  each  car,  amounting  to  $5,505  per  3'ear.  This  latter  figure  is 
approximate.  Making  a  total  for  operating  our  steamers  of  $114,140  21. 
The  percentage  of  operating  the  steamers  to  gross  receipts,  or  in  other 
words,  out  of  every  $100  that  we  take  in  for  gross  receipts,  we  pay  out 
$12  87,  or  12.87  per  cent;  the  percentage  of  cost  for  operating  our 
fteamers  to  gross  expenses  is  19.85  per  cent.  Now,  if  you  will  consider 
the  fact,  that  outside  the  Southern  Pacific  Company,  the  North  Pacific 
Coast,  and  ourselves,  that  we  are  the  only  one  that  is  taxed  with  this 
most  extraordinary  expense,  it  does  seem  to  me  that  therein  lies  a  fact 
why  we,  above  all  other  companies,  should  have  at  least  some  special 
■consideration. 

Then,  gentlemen,  while  the  steamers,  as  I  have  outlined  here,  show 
so  much  cost  to  operate  them,  it  does  not  altogether  rest  there,  because 
they    are    constantly    being    disabled.      For     instance,    the    steamer 


—  74  — 

"  Tiburon"  over  a  year  ago  broke  her  shaft — cost  about  $5,000  to  replace  ij 
it,  besides  we  lost  the  use  of  the  steamer  for  two  months.  Only  last 
month  she  broke  her  crank-pin — cost  $300  or  $400  and  laid  her  up  two 
or  three  weeks.  Then,  in  order  that  she  might  begin  the  year 
auspiciously,  on  the  1st  day  of  January,  she  went  and  burnedup;  true, 
she  was  insured,  but  the  cost  to  put  that  steamer  into  service  again, 
over  and  above  the  amount  that  we  shall  recover  for  insurance,  will  be 
a  considerable  amount — in  fact,  quite  an  item.  These  are  points,  gentle- 
men, that  we  particularly  wish  you  to  take  into  consideration  this 
evening.  Now,  our  little  road  is  not  by  any  means  a  cheap  road  to  operate 
in  the  matter  of  grades.     Our  grades  are  particularly  heavy. 

We  will  take,  if  you  like,  Colonel  Morgan's  report;  it  is  good  enough 
for  us,  and  I  suppose  you  will  be  satisfied  to  take  his  figures — but  I 
have  had  them  verified  by  our  engineer,  and  he  shows  that  after  leaving 
Tiburon,  just  above  San  Rafael,  we  have  a  grade  of  one  hundred  and 
forty  feet  to  climb;  further  on,  one  hundred  and  fifty-one  feet;  then  it 
drops  down  to  ninety-nine,  and  finally  near  Ukiah,  it  is  six  hundred 
and  ten  feet  above  sea-level.  In  connection  with  that  matter — all  of 
our  heavy  traffic  has  necessarily  to  pass  over  the  worst  grade — the 
worst  grade  is  just  above  San  Rafael — so  that  all  of  our  north  bound 
and  all  of  our  south  bound  trafiic  has  necessarily  to  pass  over  that 
heavy  grade. 

To  show  you  the  additional  cost  it  is  to  operate  over  heavy  grades  on 
our  road,  I  will  read  from  the  engineer's  report: 

The  aggregate  length  of  tunnels  on  this  road  is  eight  thousand  eight 
hundred  and  ninety-nine  feet,  or  one  and  seven  tenths  miles.  He  says 
the  maximum  grade  going  north  is  one  and  three  hundredths  per 
mile.  Passenger  locomotives  will  haul  seven  cars  north,  and  ten  cars 
south;  an  extra  locomotive  being  used  in  trains  exceeding  these  num- 
bers. Freight  locomotives  haul  twelve  cars  north,  and  eighteen  cars 
south.  When  trains  exceed  these  numbers,  extra  locomotives  are  used, 
or  two  or  more  trips  made.  Maximum  grades  in  both  directions  are 
near  San  Rafael,  only  ten  miles  from  the  southern  terminus,  and  nearly 
all  passenger  and  freight  traffic  to  and  from  San  Francisco  must  be 
hauled  over  that.  In  tunneling,  I  show  you  that  on  our  road  it  is 
greater  than  what  it  is  on  the  Pennsylvania  Railroad.  I  don't  think 
you  gentlemen  would  have  thought  of  that;  that  we,  a  little  road  run- 
ning from  San  Francisco  to  Ukiah,  one  hundred  and  sixty-five  miles, 
have  more  tunneling  on  our  road  than  the  Pennsylvania  Railroad  Com- 
pany; in  other  words,  one  and  seven  tenths  miles  of  tunnels.  How 
expensive  these  are  to  keep  up,  to  carefully  and  constantly  watch,  no  one 
but  a  railroad  man  knows. 

The  next  thing  I  would  like  to  call  the  attention  of  you  gentlemen  to, 
is  the  rough  country.  We  run  over  a  very  rough  country,  and  a  very 
sparsely  populated  one;  from  Ignacio  to  Glen  Ellen  is  a  valley,  and 
we  run  through  a  marsh.  The  Southern  Pacific  parallels  us  through  the 
valley;  the  valley  itself  is  only  one  and  one  half  miles  wide,  and  the 
population  is  so  slim  that  it  is  hard  to  find  them,  and  you  can  imagine 
how  much  two  roads  can  earn  in  that  mile  of  territory.  You  can  imag- 
ine how  little  there  will  be  for  us. 

Now  we  come  to  Cloverdale  and  the  new  extension  to  Ukiah.  From 
Cloverdale  to  Ukiah,  thirty  miles,  with  the  exception  of  Hopland,  where 
there  are  a  few  houses  and  a  small  number  of  people,  there  is  absolutely 


nothing  but  high  blufls  and  rough  country,  sheep  ranges.  "We  don't 
transport  the  sheep,  and  we  hardly  transport  the  ranges. 

The  next  feature,  and  the  one  of  very  great  importance,  is  the  ques- 
tion of  fuel;  you  have  heard  that  discussed  before.  Our  friend  Leeds, 
of  the  Trafiic  Association,  made  the  assertion  here — in  fact  he  made 
several — that  in  the  matter  of  fuel,  we  can  do  relatively  so  much  more 
than  Eastern  roads.  In  connection  with  that,  I  have"  prepared  some 
more  figures,  and  I  would  like  to  submit  some  statements  to  your  com- 
mittee.    [Handing  each  of  the  committee  a  statement.] 

This  statement — if  you  will  please  follow  me — the  first  column  I  show 
the  average  number  of  cars  in  passenger  trains;  the  average  number  of 
tons  per  engine  mile;  the  miles  run  per  ton  of  coal;  the  average  cost 
per  engine  mile  for  fuel;  pounds  of  coal  used  per  engine  mile;  average 
cost  of  fuel  per  ton.  So  as  to  make  a  favorable  comparison  with  our 
company,  I  have  chosen  the  Queen  and  Crescent  system.  The  Queen 
and  Ci-escent  system  runs  in  an  air  line  from  the  city  of  Cincinnati, 
Ohio,  through  Kentucky,  Tennessee,  Alabama,  Mississippi,  into  New- 
Orleans,  Louisiana. 

Again,  it  runs  from  Meridian,  in  Mississippi,  to  Vicksburg,  Mississippi; 
there  crosses  the  Mississippi  River  and  runs  to  Shreveport.  Those 
States  that  it  runs  through,  excepting  Ohio — for  instance,  Kentucky, 
Tennessee,  Louisiana,  Alabama,  and  Mississippi — are  all  more  or  less 
of  an  equable  climate.  The  lower  States  compare  not  unfavorably 
with  the  climate  of  our  own  climate  here.  As  Mr.  Leeds  has  seen  fit 
to  lay  so  much  stress  on  equable  climate,  it  is  just  as  well  to  give  him 
a  little  climate.  Now,  gentlemen,  if  you  will  then  follow  me,  having 
explained  the  diff"erent  features  of  our  road: 

You  will  find  the  San  Francisco  and  North  Pacific  Railway  haul  an 
average  number  of  cars  in  passenger  trains,  4.1;  the  Cincinnati  South- 
ern— that  is,  their  division  running  from  Cincinnati  to  Chattanooga, 
Tennessee,  three  hundred  and  thirty-six  miles — 4.3;  the  Alabama  and 
Great  Southern,  two  hundred  and  ninety-five  miles,  running  from  Chat- 
tanooga to  Meridian,  4.9;  the  New  Orleans  and  Northeastern,  one  hun- 
dred and  ninety-six  miles,  4.5;  the  Alabama  and  Vicksburg,  one  hundred 
and  forty  miles,  5.1 ;  Vicksburg,  Shreveport,  and  Pacific,  one  hundred 
and  seventy  miles,  running  from  Vicksburg  to  Shreveport,  across  the 
Mississippi  River,  4.6. 

The  next,  the  average  number  of  tons  per  engine  mile,  is  63.60  on  our 
road;  the  average  number  of  tons  per  engine  mile  on  the  Cincinnati 
Southern  Railroad  is  201.09,  or,  you  will  see,  three  times  as  much  as 
ours;  on  the  Alabama  Great  Southern  Railway,  178.98,  or  three  times 
nearly;  on  the  New  Orleans  and  Northeastern,  204;  the  Alabama  and 
Vicksburg  Railway,  213;  and  on  the  Vicksburg,  Shreveport  and  Pacific, 
126. 

Now,  gentlemen,  the  miles  run  per  ton  of  coal:  we  make  nearly  double 
the  mileage.  Our  road  is  45.86;  on  the  Cincinnati  Southern  Railway  it  is 
23.70;  on  the  Alabama  Great  Southern  Railway,  30;  the  New  Orleans 
and  Northeastern,  27.90;  the  Alabama  and  Vicksburg,  32.50;  the  Vicks- 
burg, Shreveport,  and  Pacific,  37.20.  It  is  very  easy,  I  think,  for  you  to 
see,  gentlemen,  why  we  can  make  nearly  double  the  miles  per  ton  of  coal, 
when  we  haul  sixty-three  tons  as  against  their  two  hundred.  In  fsict,  to 
make  the  figures  relative,  we  should  run  three  times  the  number  of 
miles  if  we  only  haul  one  third  the  tonnage. 


—  76  — 

Now,  again,  the  next  figures,  the  average  cost  per  engine  mile  for  fuel: 
Our  road,  you  Avill  notice,  is  16.1  cents;  the  Cincinnati  Southern  Railway, 
5.72  cents,  or  about  one  third;  Alabama  and  Great  Southern  Railway, 
4.52  cents;  New  Orleans  and  Northeastern,  7.31  cents;  Alabama  and 
Vicksburg  Railway,  5.80  cents;  Vicksburg,  Shreveport,  and  Pacific,  7.51 

cents.  1     1  .  1    T 

•  Now,  gentlemen,  the  next  feature  that  Mr.  Leeds  made,  and  which  1 
remember  distinctly,  is  that  we  here  ran  a  mile  on  fifty-five  pounds  of 
coal,  as  against  any  Eastern  road  running  on  one  hundred  and  ten;  I 
believe  that  was  right. 

Now,  if  you  will  refer  to  our  column,  you  will  find  that  the  pounds  of 
coal  used  per  engine  mile  with  us  is  fifty  pounds;  with  the  Cincinnati 
Southern,  ninety-five  pounds;  Alabama  and  Great  Southern  Railway, 
seventy-four  pounds;  New  Orleans  and  Northeastern,  eighty  pounds; 
Alabama  and  Vicksburg,  sixty-nine  pounds;  Vicksburg,  Shreveport, 
and  Pacific,  sixty  pounds.  But  they,  in  order  to  cost  more  to  run  the 
mile,  haul  over  three  times  the  same  amount  of  freight  that  we  do. 

NoAV,  then,  the  next  column  is  the  average  cost  of  coal  per  ton.  And 
right  here,  1  would  like  to  inter})olate  the  fact,  gentlemen,  that  these 
figures — in  fact,  I  will  substantiate  them,  wath  your  permission,  as  I  pro- 
ceed; and  you,  gentlemen,  can  see  for  yourselves  that  these  figures  are 
not  gathered  up  for  the  purpose  of  making  an  argument,  but  they  are 
actual  facts,  and  you,  gentlemen,  can  follow  them  just  as  readily  as  I 
can. 

The  average  cost  of  coal  per  ton  on  the  San  Francisco  and  North  Pa- 
cific Railway  is  $7  25.47;  Cincinnati  Southern  is  $1  37;  Alabama  and 
Great  Southern  is  $1  36;  the  New  Orleans  and  Northeastern  is  $2  03; 
the  Alabama  and  Vicksburg  Railway  is  $1  88;  the  Vicksburg,  Shreve- 
port, and  Pacific  Railway  is  $2  79. 

I  am  exceedingly  sorry  that  Mr.  Leeds  is  not  here  to-night,  for  I 
would  have  liked  him  to  have  heard  the  figures. 

Now,  gentlemen,  we  will  refer,  if  you  please,  to  the  climatic  condi- 
tions. Again,  Mr.  Leeds  has  seen  fit  to  allege  that  on  account  of 
climatic  conditions  we  can  do  all  kinds  of  impossible  things  that  East- 
ern roads  cannot  do.  Now,  let  us  see  how  that  comes  out.  In  the  mat- 
ter of  snow  on  our  road,  we  are  not  troubled  with  it;  our  friends,  the 
Southern  Pacific  and  other  roads  are.  The  slides  and  washouts  we  are 
troubled  with,  because  we  never  have  a  heavy  rain  that  we  do  not  have 
slides  and  washouts;  in  fact,  up  above  Cloverdale,  where  the  bluffs  run 
high  and  the  hills  slip  back  for  three  or  four  hundred  feet  high,  just  as 
soon  as  we  remove  anything  from  the  base,  the  water  comes  down  and 
carries  the  hill  with  it,  and  we  find  our  track,  instead  of  being  over  it, 
is  out  in  the  river.     This  is  not  an  infrequent  occurrence. 

Now,  in  the  matter  of  cross-ties:  IMr.  Leeds  distinctly  made  the  state- 
ment the  other  night  that  the  Eastern  roads  replaced  their  cross-ties  two 
or  three  times  as  often  as  we  do.  Now,  let  us  see  how  that  comes  out.  I 
call  your  attention,  Mr.  Chairman,  to  a  comparative  statement  of  replace- 
ment of  cross-ties.  [Mr.  Mellersh  here  handed  each  member  of  the  com- 
mittee a  statement  in  regard  to  cross-ties].  You  will  notice  it  gives  the 
names  of  railroads,  and  the  rate  per  one  hundred  thousand  ties  replaced 
per  year  in  1891  and  1892,  and  the  cost  per  tie.  I  again  use  these  same 
roads,  because,  as  I  stated,  they  run  through  States  whose  climate  is 
about  as  equable,  as  a  general  thing,  as  our  own.  I  have  lived  down  there, 
and  1  know  whereof  I  am  speaking: 


_  77  — 

On  the  San  Francisco  and  North  Pacific  Railway  we  replace,  per  one 
hundred  tliousand  cross-ties,  fourteen  thousand  five  hundred,  or  one 
seventh,  and  the  cost  per  tie  was  35  cents. 

The  Cincinnati,  New  Orleans,  and  Texas  and  Pacific  Railway  replaced 
twenty  thousand  per  hundred  thousand  cross-ties,  or  one  fifth  the  lirst 
year,  or  one  quarter  the  second  year,  costing  30  cents  per  tie. 

The  Alabama  and  Great  Southern  Railway  replaced  twenty  thousand 
in  181U,  or  one  fifth,  and  in  1892  one  quarter,  at  30  cents  per  tie. 

The  New  Orleans  and  Northeastern  Railway  replaced  only  ten 
thousand,  you  will  iiotice,  or  less  than  ourselves  by  forty-five  hundred 
per  hundred  thousand;  one  tenth,  as  against  our  one  seventh  in  1891, 
and  one  ninth  the  next  year  against  our  one  seventh,  and  they  paid  for 
their  ties  25  cents  each. 

The  Vicksburg  and  Meridian  replaced  twenty  thousand,  or  one  fifth 
in  1891,  and  one  quarter  in  1892,  at  30  cents  per  tie. 

The  Vicksburg,  Shreveport  and  Pacific  replaced  twenty  thousand 
cross-ties,  or  one  quarter  the  first  year,  and  one  filth  the  second  year,  at 
a  price  of  30  cents  jjer  tie. 

Now,  the  whole  of  the  question  does  not  rest  there,  Mr.  Chairman; 
for  the  fact  is  that  we,  in  California,  use  generally  redwood  for  our  ties; 
East,  they  use  mainly  pine.  Our  engineer,  who  has  studied  this  question, 
says: 

"  From  the  above,  it  will  be  seen  that  the  average  life  of  ties,  princi- 
pally of  pine,  referring  now  to  Eastern  ties  on  the  Queen  and  Crescent 
road,  with  the  exception  of  the  New  Orleans  and  Northeastern,  is  from 
four  to  five  years. 

"  On  this  road,  our  run  is  seven  years.  While  the  redwood  is  an 
excellent  wood  to  resist  decay,  from  the  fact  that  it  is  very  soft;  a  majority 
of  the  ties  on  this  coast  are  renewed  on  account  of  being  worn  out,  or  cut 
out  under  the  beds  of  the  rail.  The  fact  also  remains,  Mr.  Chairman, 
that  inasmuch  as  those  Eastern  roads  run  so  much  heavier  engines  than 
we  do,  haul  so  much  heavier  loads,  longer  trains,  that  they,  as  com- 
pared with  ourselves,  would  naturally  use  ties  a  little  oftener;  but  we 
claim  that  our  one  seventh,  as  against  their  one  tenth  or  one  fifth,  is 
not  an  unequal  comparison;  and  hence,  that  Mr.  Leeds,  in  having  made 
the  assertion  that  we  can  use  our  ties  two  or  three  times  as  long  as  they 
can  East,  is  not,  according  to  records  that  we  have  obtained — and  we 
contend  our  records  are  reliable — is  not  strictly  correct. 

Now,  gentlemen,  he  made  another  assertion — it  is  becoming  a  hack- 
neyed assertion — but  I  went  to  the  pains  of  asking  our  General  Man- 
ager and  our  Engineer  to  figure  out  the  assertion  made  by  Mr.  Leeds  in 
regard  to  the  use  of  cross-ties,  and  I  would  like  him  to  know  tliat  it  is  a 
fact  that  we  do  use  some  of  our  cross-ties  after  they  have  been  taken  out 
of  the  track  for  fence  posts,  and  so  far  as  we  can  find  out,  during  the  last 
three  or  four  years  we  have  used  a  sufficient  quantity  to  result  in  the 
saving  to  our  company  of  something  like,  all  told>  an  aggregation  of 
$159. 

Now,  gentlemen,  it  is  also  a  fact — and  with  so  many  railroad  men 
present,  if  I  do  not  make  figures  that  are  absolutely  reliable,  there  are 
plenty  here  that  would  catch  me  up — that  a  railroad  company  does 
duplicate  its  road  practically  in  every  ten  or  fifteen  years,  so  far  as  its 
roadbed  is  concerned;  that  is  the  ties,  and  rails,  and  wooden  bridges, 
and  equipment,  but  iron  bridges  not  so  often;  they  might  run  to  twenty 


—  78  — 

or  twenty-five  years,  or  perhaps  longer.  But,  you  say,  we  have  an 
engine  that  we  have  been  using  for  twenty  years.  Yes,  we  have;  but 
during  that  time  that  engine  has  had  new  driving  wheels,  new  trucks, 
cylinders,  new  jacket,  and  perhaps  so  much  has  been  renewed  of  the 
engine  to  what  it  originally  was,  that  you  can  say  it  is  not  the  same 
engine.  Now,  if  you  will  take  that  fact  into  consideration,  that  the 
railroad  has  practically  to  duplicate  itself  in  every  ten  or  fifteen  years,  you 
can  see  what  resources  railroad  men  are  put  to  in  order  to  maintain  at 
all  times  a  standard,  not  only  required  for  the  safety  of  the  people,  but 
for  the  safety  of  the  road. 

Now,  another  feature  we  have  to  contend  with  lies  in  the  fact  t]iat 
our  traffic,  if  you  will  kindly  refer  to  page  58,  table  M,  you  will  find 
that  products  of  the  forest  are  25.96  per  cent  of  our  total  freight  traffic; 
therefore,  on  such  conditions  we  are  relying  on  timber,  lumber,  shakes, 
shingles,  tan  bark  and  such  forest  products  for  that  much  of  our 
revenue.  By  reason  of  the  country  contiguous  to  our  railroad  at  Guer- 
neville,  XJkiah  and  other  sections  having  been  cleared,  the  haul  of  such 
timber,  lumber,  etc.,  is  so  much,  that  hardly  any  of  those  men  can  now 
ship  the  same  quantity  as  heretofore,  by  reason  of  the  expense  of  haul- 
ing; therefore,  our  revenue  by  that  reason  is  mulcted  to  that  extent. 
Then  again,  we  haul  rock,  and  in  hauling  rock  we  get  something  between 
half  a  cent  and  three  quarters  of  a  cent  per  ton  per  mile;  or,  if  you 
figure  out  the  cost  of  hauling  it,  an  actual  loss  to  the  company.  Then 
again,  we  have  no  mineral  traffic  to  haul,  with  the  exception  of  blocks 
or  something  like  that;  we  have  no  coal,  so  that  our  road  is  purely  de- 
pendent on  agricultural  and  forest  products. 

Then  again,  the  next  feature,  and  which  I  particularly  wish  you  to 
bear  in  mind,  lies  in  the  fact  that  we  are  subject  to  the  severest  com- 
petition. At  San  Rafael  and  as  high  as  Petaluma  we  have  water  com- 
petition. The  sloughs  run  up  as  high  as  Petaluma,  so  that  steamers 
and  schooners  run  at  all  times,  and  they  haul  freight  so  exceedingly  low 
because  their  cost  of  transportation  is  so  low,  that  no  railroad  company 
can  compete  with  water  transportation.  That  harasses  us  more  than 
you  can  imagine,  and  hurts  our  revenue  not  a  little. 

Now  again,  in  regard  to  the  measure  that  you  speak  about,  of  making 
rates  3  cents  per  mile.  The  State  has  given  us  the  permission  to  charge 
15  cents  per  mile. 

Earl:  Wherein? 

Mellersh:  The  laws  of  the  State,  I  believe;  the  Commission.  To 
,  show  you  that  we,  as  a  corporation,  are  always  willing  to  conform  to  the 
laws,  and  do  better  than  the  law  requires,  our  average  rate  per  passenger 
per  mile,  if  you  will  kindly  refer  to  another  table,  table  J,  on  page '53,  for 
last  year,  is  two  and  two  hundredths  cents  per  mile.  The  reason  why 
that  figure  is  so  low,  I  explain  to  you,  lies  in  the  fact  that  a  good  deal 
of  our  traffic  is  suburban  traffic.  That  traffic  consists  of  three  or  four 
hundred,  or  may  be  less,  people,  who  pay  us  $5  per  month  for  carry- 
ing them  sixty  trips,  each  trip  being  sixteen  and  a  half  miles,  or  less 
than  half  a  cent  per  passenger  per  mile.  Then  again,  to  hunters  and 
excursionists,  to  all  those  who  come  in  parties,  we  are  always  ready  to 
meet  them  half  way  on  any  proposition  they  may  have  to  offer;  so  that 
I  contend  that  our  passenger  rate,  two  cents  per  mile,  compares  very 
favorably,  when  you  consider  the  expense  of  operation,  with  any  rail- 
road fare  in  the  world;  not  only  America,  but  the  world. 


—  79  — 

Now,  gentlemen,  a  word  as  to  the  cost  of  our  property.  Mr.  Biirgin 
in  his  report,  and  I  contirni  all  that  the  President  has  said,  made  the 
statement  that  our  road  cost  us  $7,059,026.  Mr.  Leeds  has  contended — 
I  don't  exactly  remember  where,  but  I  think  that  such  can  be  borne  out 
as  the  fact — that  a  railroad  company  cannot,  he  says,  expect  to  earn 
dividends  upon  its  present  cost,  because  railroads  can  be  built  now 
cheaper  than  when  they  were  originally  constructed,  and  he  gets  out  of 
it  by  saying  that  if  you  make  a  bad  investment  that  is  your  affair. 
That  is  all  right.  Now,  then,  for  the  argument.  We  are  willing  to  con- 
cede the  fact  that  our  road  cost  $7,090,000.  We  are  willing  to  put  it 
on  the  basis  of  75  cents  per  dollar  upon  its  cost  in  order  that  we  may 
to-day  make  a  fair  return  to  the  investors  in  the  property.  Three- 
quarters  of  the  value  of  the  figures  I  gave  you  would  amount  to  $5,317,- 
544  44.  The  mortgage  bonds  of  the  road  are  $4,188,000,  leaving  therefore 
$1,129,544  44.  Now,  then,  on  Mr.  Leeds'  basis,  we  should  earn  a  dividend 
on  that,  and  I  think  5  per  cent  you  will  concede  is  a  fair  dividend. 
Five  per  cent  on  that  would  result  in  giving  us  $56,477,  or  less  than  1  per 
cent  upon  the  capital  stock  of  the  company  at  present.  But  on  that 
basis  we  could  pay  on  $1,000,000,  $1,129,500  44 — 5  per  cent,  equal  to 
$56,477.  Before,  however,  we  can  pay  $1  out  in  dividends  we  have  to 
pay  for  interest  on  the  mortgage  bonds,  per  year  $209,400,  in  addition  to 
which  a  sinking  fund  of  $25,000,  making  a  total  of  $234,400,  which 
must  be  provided — otherwise  it  means  foreclosure. 

Therefore,  gentlemen,  I  contend  that  last  year,  page  number  ten,  if 
you  care  to  refer  to  it,  you  will  find  that  we  succeeded  in  obtaining  a 
net  result  of  $81,017  19,  which,  under  ordinary  circumstances,  would 
have  been  available  as  dividends,  but — and  there  always  seems  to  be  a 
but  in  these  dividend  questions — the  money  has  never  been  paid  to 
the  stockholders;  in  fact,  since  the  inception  of  this  company,  the  19th 
day  of  March,  1889,  up  to  now,  not  one  dollar  has  been  paid  to  the  men 
that  put  their  money  in  the  property,  in  the  way  of  dividends.  There- 
fore is  it  not  fair,  is  it  not  right  to  ask  you,  gentlemen,  to  pass  no  measure 
that  shall  disturb  our  present  basis.  Now,  Mr.  Leeds  seeks  to  introduce 
— or  the  Traffic  Association,  or  by  some  means,  I  don't  exactly  know 
how — a  bill  here  on  what  he  calls  a  California  Distance  Tariff. 

By  way  of  explanation,  Mr.  Chairman,  I  would  like  to  say  that  you 
will  see  under  the  class  rates — the  first  column  is  our  rates  at  present 
in  efiect,  the  blank  column  the  rates  that  would  be  in  effect  under 
this  distance  tariff — you  will  there  find  that  five  miles  and  under, 
where  we  now  get  per  hundred  pounds,  5  cents,  this  new  schedule 
would  give  us  but  3f  cents;  then  if  you  like  to  jump  down  to,  say  fifty 
miles,  you  will  find  where  we  are  getting  37  cents,  this  new  measure 
would  give  us  25  cents;  now  if  you  like  to  jump  down  again  further, 
say  eighty  miles,  you  will  find  that  where  we  are  now  getting  43  cents, 
we  will  get  35  under  the  new  tariff. 

Now  these  rates,  Mr.  Chairman,  and  we  have  figured  them  out  care- 
fully, simply  mean  that  it  is  an  absolute  reduction  in  our  present 
freight  tariff  of  between  35  and  50  per  cent  on  our  class  rates,  and  on 
our  carload  business — and  most  of  our  traffic  is  carloads,  consisting  of 
lumber,  shingles,  and  stuff  like  that — the  reduction  would  be,  and  I  will 
read  them  out  to  you:  52  per  cent,  54  per  cent,  51^  per  cent,  50  per 
cent,  51  per  cent,  and  so  on,  plainly  showing  to  you,  gentlemen,  that 
the  reduction  would  mean  to  this  company  a  cutting  down  of  our  freight 


—  80  ^ 

revenue,  by  the  introduction  of  such  an  amendment,  of  over  50  per  cent 
in  our  revenue.  Colonel  Morgan  in  his  report  has  given  a  statement 
showing  the  population  of  the  country,  whicli  Mr.  Burgin  made  to  you — 
but  he  makes  another  statement  here  that  I  think  gives  a  good  deal 
of  information,  and  I  think  Avill  illustrate  how  much  of  certain  com- 
modities we  have  to  draw  from.  We  consider  that  wine,  grapes,  and 
such  commodities  are  quite  large  factors  in  our  business. 

If  you  will  look  at  this  report,  you  will  find  that  Mendocino  County- 
contains  an  acreage  in  grapes  of  about  two  hundred  and  four  acres;  in 
Marin  County,  about  five  hundred  and  two  acres,  and  in  Sonoma  County^ 
twenty-two  thousand  six  hundred  and  eighty-three  acres;  so  that  our 
railroad  has  about  twenty-three  thousand  acres  to  draw  from  to  get  the 
wine  shipments  and  grape  shipments,  which  are,  as  I  said,  quite  a  large- 
factor. 

Then  again,  the  entire  population  of  the  three  counties  is  only  sixty- 
thousand,  about,  and  out  of  that  sixty  thousand  there  is  the  San. 
Francisco  and  North  Pacific  Railway,  the  North  Pacific  Coast  Railway, 
the  Southern  Pacific  Company,  and  those  schooners  and  steamers  that 
go  up  there  to  draw  from;  when  we  all  cut  up  that  sixty  thousand  we 
don't  get  many  each. 

In  buying  our  material  in  California,  there  is  quite  an  element.  Cast 
iron,  per  pound,  in  Kansas  is  If  cents,  here  it  is  4  cents;  wheels — and 
we  are  bound  to  have  wheels  for  cars — cost  in  St.  Louis  $8  50,  in  New 
York  they  cost  $8  75,  and  here  they  cost  us  $14. 

Now,  gentlemen,  that  high  rate — not  the  high  rate,  but  the  difference 
in  price — does  not  rest  in  the  fact  that  the  railroad  companies  are  charg- 
ing too  much  to  get  the:n  here,  but  it  is  all  attributable  to  the  fact 
that  America  is  too  big;  the  country  ought  to  be  condensed,  and  we 
could  get  our  supplies.  In  starting  out,  Mr.  Chairman,  I  stated  to  you 
that  already  what  we  were  doing  in  California  was  making  itself  felt 
East;  I  don't  know  whether  or  not  this  committee  would  care  to  know 
the  opinion  that  the  railroad  papers  have  of  the  situation  in  Califor- 
nia.    If  you  do  not  wish  to  hear  it,  I  will  not  read  it. 

Earl:  Proceed,  Mr.  Mellersh. 

Melleksh:  The  "Railway  Age,"  under  date  of  January  20,  1893, 
reads  as  follows: 

"  The  bitter  and  vindictive  warfare  which  is  being  waged  by  many  of 
the  newspapers  and  people  of  Northern  California,  more  especially  those- 
of  San  Francisco,  against  the  railway  companies  of  that  State,  furnishes 
an  extraordinary  example  of  ingratitude  and  injustice.  Because  Cali- 
fornia is  cut  oft'  by  thousands  of  miles  of  desert  and  mountains  from 
the  great  markets  of  the  world,  and  because  within  its  limits  the  con- 
struction and  operation  of  railways  is  attended  with  great  expense, 
owing  to  the  character  of  the  country,  the  lack  of  diversified  indus- 
tries, the  high  cost  of  fuel,  and  the  maintenance  of  large  land  holdings, 
railway  rates  naturally  have  to  be  higher  than  they  are  in  the  thickly 
settled  and  productive  East.  And  yet,  it  is  against  this  result  of  natural 
causes  that  the  popular  clamor  is  so  unreasonably  raised.  The  demand 
is,  in  efl'ect,  that  the  railways  shall  literally  annihilate  distance  and 
ignore  nature  so  far  as  their  charges  are  concerned,  and  give  the  people 
of  the  mountains  and  plains  of  California  as  low  rates  for  transportation 
as  are  offered  in  Illinois  or  New  York.  It  is  in  vain  that  the  railway 
companies  set  forth  the  cost  of  constructing  their  pioneer  roads  across 


—  81  — 

the  continent,  point  to  their  load  of  debt  and  show  that  the  expenses  of 
operation  absorb  the  earnings  so  that  bankruptcy  has  overtaken  some 
and  threatens  all  the  lines.  San  Francisco  merchants,  fruit  and  grain 
growers,  and  the  politicians  and  papers  that  follow  after  popularity- 
repeat  the  cry  '  rates  must  come  down,'  and  demand  that  all  the  power 
of  the  State  government  shall  be  employed  to  this  end,  oblivious  of  rea- 
son and  justice. 

"Accordingly,  the  session  of  the  Legislature  just  convened  promises  to 
be  memorable  for  the  passage  of  laws  intended  to  crush  the  railwaj's, 
particularly  the  Southern  Pacific  Company,  which,  having  developed  the 
State  into  independence,  is  now  inconsistently  denounced  as  its  enemy. 
Already  three  hostile  measures  are  under  consideration:  First,  Shana- 
han's  concurrent  resolution,  providing  for  a  constitutional  amendment 
abolishing  the  Railroad  Commission;  second,  Schlesinger's  resolution, 
providing  for  the  appointment  of  a  special  committee  to  investigate  the 
Railroad  Commission,  and  to  prepare  articles  for  the  impeachment  of 
one  or  more  members  of  the  Commission,  if  the  special  committee  deem 
impeachment  justifiable;  third,  the  Traffic  Association  resolution,  pro- 
viding for  a  constitutional  amendment  abolishing  the  Railroad  Com- 
mission, authorizing  the  Legislature  to  fix  rates  for  freight  and  fares, 
and  providin'g  in  the  Constitution  a  tariff  to  be  operative  in  case  the 
Legislature  should  not  fix  rates. 

"  The  last  proposed  measure,  upon  which  Mr.  E.  S.  Leeds,  as  Manager 
of  the  Merchants'  Traffic  Association,  has  concentrated  his  ability  and 
long  experience  in  the  railway  service,  is  an  extraordinary  embodiment 
of  reckless  enmity  to  the  railways.  It  proposes  not  only  to  abolish 
the  Railroad  Commission,  which  has  shown  some  disposition  to  be 
fair  to  the  roads,  but  to  insert  in  the  State  Constitution  a  schedule 
of  maximum  rates  for  fare  and  freight  far  lower  than  those  now 
obtained,  which  rates  shall  be  charged  if  for  any  reason  the  Legislature 
fails  to  fix  a  tariff.  Such  matter  has  never  been  embodied  in  the  Con- 
stitution of  any  State,  and  the  proposition  to  make  it  i)art  of  the  organic 
law  shows  the  desperate  animosity  of  its  authors  towards  the  railways, 
and  their  determination  to  prevent  the  sober  and  reasonable  regulation 
of  the  rate  question  by  the  representatives  of  the  people,  from  time  to 
time,  as  the  facts  and  conditions  shall  seem  to  warrant.  The  proposed 
amendment  contains  a  complete  table  of  freight  rates  fixed  to  suit  the 
fancy  of  the  shippers,  and  very  much  lower  than  those  which  the  rail- 
ways consider  it  possible  to  operate  their  roads  upon;  while  the  matter 
of  passenger  rates  is  easily  settled  by  declaring  that  they  '  shall  not  be 
more  than  2  cents  per  mile,'  a  rate  to  which  none  of  the  old  and  popu- 
lous States  in  the  country  (excepting  the  case  of  a  small  portion  of  the 
New  York  Central  Railway)  has  ever  had  the  heart  to  restrict  its  rail- 
ways. In  view  of  the  extraordinary  conditions  surrounding  railway 
operations  in  California — some  of  which  were  shown  in  the  extract 
which  we  recently  published  from  the  testimony  of  an  impartial  expert 
employed  by  the  Railroad  Commission — it  is  not  creditable  to  the  intel- 
ligence or  sense  of  fairness  of  the  people  of  California  to  believe  that 
they  will  ratify  such  a  monstrous  enactment  against  one  of  the  interests 
3f  the  State  as  is  thus  threatened — an  enactment  in  comparison  with 
which  the  anti-railway  legislation  of  the  Granger  demagogues  of  Texas 
appears  mild  and  tender  hearted." 
6 


Earl:  Where  is  that  published? 

Mellersh:  In  Chicago  and  St.  Paul.  I  will  file  it  with  the  committee, 
if  they  wish  to  have  it. 

Railroads,  Mr.  Chairman,  are  quasi-public  in  character.  When  people 
get  an  idea  that  railroads  must  reduce  rates  they  don't  exactly  find  out 
the  cause,  but  they  make  up  their  mind  it  must  be  so.  To  convince 
them  to  the  contrary  is  very  much  like  the  njan,  you  will  remember,  who 
refused  to  wear  clothing.  When  they  asked  him  why  he  refused  to  wear 
clothing,  "  Well,  when  you  can  bring  a  man  to  me  who  will  convince  me 
why  it  is  a  sheep  raises  wool  out  of  eating  grass,  I  will  wear  clothing." 
That  man  went  naked,  and  so  he  ought  to.  And  so  it  is  with  us.  We 
meet  the  people  on  any  reasonable  request.  If  they  M^ant  special  rates, 
we  give  them;  and  it  does  seem  to  me,  that  inasmuch  as  our  company 
practically  have  pleased  all  of  our  patrons — because  there  is  nothing  on 
file,  except  two  little  citations,  to  amount  to  anything — it  does  seem 
hard,  where  we  are  struggling  along  for  the  purpose  of  tr3dng  to  make  a 
living — for  the  purpose  of  trying  to  give  to  the  people  some  little  return 
for  the  money  they  put  in — it  seems  hard  that  the  Traffic  Association 
shall  get  up  in  their  might  and  ask  the  Legislature  to  enact  a  law  that 
will  simply  shut  us  out  of  existence. 

It  would  not  be  very  difficult,  Mr.  Chairman,  to  define 'two  pictures. 
One  shall  be  ten  years  hence,  if  you  like.  The  sun  is  climbing,  gilding 
the  mountain  tops,  and  as  it  climbs  up  the  horizon,  warms  up  our 
beautiful  and  fertile  valleys;  on  each  side  you  see  trees  in  their  blossom; 
later  on,  the  golden  fruit  and  the  grain,  undulating  with  the  breeze; 
the  people  going  or  gone  to  their  business,  traveling  in  palace  cars  and 
palatial  steamers;  the  people  happ}^,  and  the  population  increasing. 

The  other  side  would  be,  the  Legislature  having  enacted  a  law  that 
shall  practically  crush  out  all  little  companies;  that  where  these  bright 
steel  rails  were,  two  lines  of  rust  are;  the  grass  overgrown,  the  cars  and 
engines  side-tracked,  everything  having  the  appearance  of  innocuous 
desuetude,  the  population  decreased,  this  beautiful  State — none  better 
in  the  Union — instead  of  being  prosperous,  simply  standing  still,  or 
perhaps,  retrograding. 

Mr.  Chairman,  I  do  not  want  to  take  any  more  time  of  your  committee, 
but  it  does  seem  to  me  that  we  have  given  you  such  facts  and  figures 
as  will  clearly  evidence  to  you  why  such  a  law  should  not  be  enacted  in 
this  State;  in  fact  pleadingly,  I  might  almost  say  patlietically,  we  ask 
you  not  to  pass  any  law  that  will  not  let  us  make  a  return  to  the  people 
who  have  invested  in  our  jjroperty.  How  can  we  go  East  or  across  the 
ocean  and  ask  people  to  come  here  and  buy  our  bonds?  How  can  we 
ask  people  to  extend  our  roads  and  put  their  money  in  them,  and  have 
them  say  at  the  first  legislation,  "  We  get  no  return ;  why  should  we  send 
our  money?"  This  question,  Mr.  Chairman,  will  be  further  reaching 
than  California.  It  does  not  stop  at  California.  It  will  stop  almost 
everything;  it  will  stop  our  wheels;  it  will  hamper  our  roads;  it  will 
stop  our  State  ten  years,  in  my  opinion,  if  any  such  bill  is  passed. 

And  we  now  ask,  gentlemen  of  the  committee,  that  you  consider  this 
proposition  most  seriously,  and  not  pass  any  bill  that  does  not  fix  bases 
as  high  as  they  are  now,  so  that  we  shall  be  enabled  thereby  to  earn  as 
much  as  we  do  now. 

Mr.  Chairman,  and  gentlemen,  I  thank  you. 


—  83  — 

Gesford:  I  think  the  line  of  argument  in  reference  to  these  short 
roads  will  be  about  the  same  in  each  case.  The  road  I  would  like  par- 
ticularly to  hear  from  is  the  Southern  Pacific  Company,  and  I  would 
like  to  have  a  time  fixed  for  them;  that  is  last  on  our  list,  and  I  have 
some  other  matters  to  attend  to.  Mr.  Leeds  is  unable  to  be  here,  but  I 
think  I  have  the  trend  of  the  argument  of  all  these  short  roads. 

Earl:  During  the  evening,  Mr.  Gesford,  we  will  fix  the  time  when 
the  Southern  Pacific  Company  will  be  heard. 

Gksford:  Well,  then,  I  will  go  before  the  other  committees;  most  of 
this  argument  will  be  written  out,  anyhow. 

The  following  statements  were  filed  by  Mr.  Mellersh: 


San  Francisco  and  North  Pacific  Railway  Company. 

Statement  of  Cost  of  Operating  Steamers. 

(Steamer  repairs  - $14,956  36 

Steamer  expenses  and  wages  of  crew 36,667  51 

Dock  repairs . 3,783  37 

Fuel  for  steamers 36,427  97 


$91,835  21 

Rent  of  slip,  $1,400  per  month $16,800 

Switching 5,505       22,305  00 

Percentage  of  cost  to  gross  receipts,  12.87  per  cent. 
Percentage  of  cost  to  gross  expenses,  19.85  per  cent. 


$114,140  21 


Comparative  Statement  of  Replacement  of  Cross-Ties. 


Names  of  Railroads. 

Per  100,000 
Ties  Per  Year. 

1891. 

1892. 

Cost  Per  Tie. 

S.  F.  &  N.  P 

$14,500 
20,000 
20,000 
10,000 
20,000 
25,000 

1 

i 

i 

C.  N.  0.  &.  T.  P 

A.  G.  S 

30  cents. 
30  cents 

N.  0.  &  N    E 

V.  &.  M 

30  cents 

V.  S.  &  P 

30  cents 

Comparative  Statement  of  Cars  per  Train,  Tonnage  per  Train,  and  Cost  of  Fuel. 

>■ 
a  O 
o  ft 


Name  of  Road. 


> 

•> 

if 

f 

ft  o  5 

w  c  :^ 

OS 

E  3  0) 

■Ss^ 

a  a  » 

^oi 

oS 

fD.aci  .^ 

tt  o 

•-!  t^m 

Be''! 

1    BcK! 

^OJ  m 

c*^  ^ 

0 

'.    Z  3" 

;    a.  a- 

e-»- 

',    ■-h'd 

W  IT 

Z  a> 

,       ■     f-i 

'  >-j 

.     >-i  *-t 

a°' 

4.1 

63.60       ^ 

15.86 

16.10 

50 

4.3 

201.09      i 

23.70 

5.77 

95 

4.9 

178.98      : 

50.00 

4.55 

74 

4.5 

204.04      '. 

J7.90 

7.31 

80 

5.1 

213.40      : 

52.50 

5.80 

69 

4.6 

126.31       c 

(7.20 

7.51 

60 

San  Francisco  and  North  Pacific  Rail 
way  (162.25  miles) 

Cincinnati  Southern  Railway  (336  miles) 

Alabama  Great  Southern  Railway  (295 
miles) 

New  Orleans  and  Northeastern  Rail- 
way (196  miles) 

Alabama  and  Vicksburg  Railway  (140 
miles) ._ 

Vicksburg,  Shreveport,and  Pacific  Rail- 
way (nci  miles) 


$7  25.47 
1  37 

1  36 

2  03 

1  88 

2  79 


—  64  — 


re's 


I 


a 
o 

a 

u 

o 

p 

a 
o 

1 
S 

§  t: 

G5 

c^ 
■^  o 

a -3 

C  O. 

a5 

§ 

o 
a 

o 

•a 
<o 
o 

u 
03 

o 

eOCOCOCO-*-*-a<-^lOlftlCCCVDCDt^l:^t^0000050500 

S.  F.&N.  P. 

1       rt<000505C500-^^C--|COCO'!)<-*^lO^^CDJDCDOO 

0 

[     M  CO  CO  CO  re  CO  cc  ?o  Tf  rj< -*  lo  10 10  0  ic  :o  CO  <x>  t^  t^  ^~  t~ 

S.  F.  &  N.  P. 

-^  10  CO  CO  «  -^  C-^l  'M;;cCt^0005000-^'MOtOCOI-- 

0 

COCOCOCOTj<^lC>OCOtOO:Ot~t^t~1^00000000050505 

S.  F.  &  N.  p. 

ioa5co-x.ro3^-.co2i::^«2gOj-^j^c^2:gr^r^oo      j 

i 

0 

COCOeOTj<OiO<OCDt^t^OOOOC»a)050300rH-^^C-10^ 

S. F.&N.  p. 

>OOt^t-OC0'M-^'*<CC000:O'-lr-iiMlMCC-*t^0Ca005 

5 

COCO-*iOCOOt^I>OOOOG5CT>00-^-^C-1COCOT)<T)<io® 

S.  P.  &  N.  P. 

>ot-oooo;H303^2052o-gic:^g^go^^gog.fflo 

0 

CO'*<lO»l>000500'-HC1rO-*-*l«lC':00000050'-l(M 
rHrt^r-li-lrH.-(rtT-lr-lT-l.-l(M!N(N 

S.  F.&N.  P. 

lOOOOiOJ'MLO^COtOOC'-^IMCOCO^-'i'lCtOCnOO'H 
rt  ,-1  1-1  rt  rH  ■M  CJ  C-J  :~1  !M  C^l  M  (N  C^l  C-4  <M  CO  CO  CO 

0 

eOCO-*lOCOt-0000050'^<MCOCO-#Tt(lC;OCDr-OOCiO 
1-Hi-I.Hi-lt-lrH>-li-lrHi-l^l-lT-<IM 

S.  F.&N.  P. 

ioo5oooc^i-*cor~t^— '-^c<ico-*-*>cm"t^o^T-icq 

^T^rt^.-lr.lC-l(MC^)CS(M<M<N<MC^0qcOC0C0C0 

■a 
a 

0 
O 

p. 

s 

0 

G 

c 

S3 

CO-^>Ot-0005^:^-*vO;Or~COODai050>-H-^'MCO-t*10 

S.  F.  &  N.  P. 

lOO05-HC0lC^OO-t<-1>lCC0t-1^0C0CC;C<IC0-*'-^lO 
.-1        ^rt.-i^i-i(M<MC^(MCl(N^5(MMC-<COCOCOCOCO 

1 
0 

CO-^COO'-ICO'^lCt^OOOSO-^C-ICO'^lOtCt^-COOiO'H 
rH  i-l  ^  r^  .H  rH  >—  CI  ~1  !M  e-1  C^l  !M  C-l  O  CI  CI  CO  CO 

S.F.  &N.  P. 

>oooco>ct~coocot^r~oooiOO-j'-ic«o;ot~r~oo 

T-i.-H,-(i-lT-lrtC<IC10<l<NC<)<MCOCOCOCOCOCOCOCOCOeO 

,2 
6 
■a 

CO-*t>OCI-*fflCCC»OCacO-^l-C050GJO-HC5CO'<*<lft 
T-l-^,-l^,-l-HC)ClClClC4dON?^COCOCOCOCO 

S.  F.  &  N.  P. 

ioo>-iioi^oc;:oi^-^'-ic<iy:^^iftic;cs;0'HT-ie^ 

i-li-(-H7-IC)rHC<WCOCOCOCOCOCOCOCOCCCO-*-*Tt<T^ 

1 

I-H 

CCTTOCCllCOOCCl-fi-Ct-COONCOiCr-OCClC— 'dCO 

>-i^'-iMdcidC)cicccococococccoTr-<)<Tj<T>< 

8.  F.&N.  P. 

100— imccciioo-<*ii:~c;o-^cicicocO'rct^Qcc5a!0 

1— 1*— <i-Ht-kC1C^COCOCOCO-^'^'^-^-^-^tji-^tJ<-»^t5hio 

1  tn 

',_oi«o>ooicoi.ioico>ooioo>coinooS 
t^ir3^,HC<icicoco'*<-*iraoco»i:~r~ocooa303^<-i»-i 

-0^-353 

§0          

-o-s 

§s =  =  =  =  =  =  =  =  =  = 

J:S=  =  -  =  =  =  =  =  =  >  =  3- r - 

1   II  1   1  J   1  T  M   M   !   1   1   1   1   1   1   M   1   1 
66666666666666666666666 

—  85  — 
Statement  of  W.  F.  Russell. 

(Representing  the  North  Pacific  Coast  Railway.) 

Representing  the  North  Pacific  Coast  Railroad,  I  beg  to  state  that  no 
complaints  have  been  made  along  the  line  of  our  road,  either  on  the 
rates  of  fares  or  freights.  From  statistics  compiled  for  the  last  year's 
business,  the  passenger  rates  over  the  North  Pacific  Coast  Railroad  aver- 
age 1.38  cents  per  mile,  and  the  freight  rates,  3.99  cents  per  ton  per  mile. 
Under  this  Gesford  amendment,  it  is  proposed  that  roads  of  our  earning 
capacity  shall  be  limited  to  a  charge  for  passengers  of  not  to  exceed  3 
cents  per  mile,  and  for  freight,  according  to  that  mentioned  in  the  ''  Cali- 
fornia Distance  Tariff",''  in  conjunction  with  the  Western  Classification, 
which  would  at  once  reduce  our  rates  on  freight  from  35  to  45  per  cent, 
and  which  would  compel  us  to  do  our  freight  business  at  an  actual  loss. 
The  gross  earnings  per  mile  are  $4,478. 

Being  in  direct  competition  with  water  on  one  side  and  a  railroad  on 
the  other,  we  are  to-day  hauling  the  chief  products  of  Sonoma  and  Marin 
Counties  at  such  rates  as  compel  us  to  carry  north-bound  freight  at  our 
present  tariff  rates,  and  the  rates  on  these  products  are  computed  at 
almost  first  cost.  Seventy-five  per  cent  of  the  earnings  derived  from 
freight  traffic  on  this  road  cover  that  brought  to  San  Francisco,  thereby 
compelling  50  per  cent  of  our  returning  freight  cars  to  be  hauled  back 
empty;  and,  owing  to  the  mountainous  country  through  which  we  travel, 
the  expense  of  hauling  these  loaded  cars  over  these  steep  grades  and 
fiharp  curves  leaves  a  very  small  margin  of  profit. 

Again,  all  the  goods  that  go  to  or  from  San  Francisco  have  to  be 
handled  or  unloaded  by  us,  thereby  reducing  our  freight  charge  per  ton, 
in  some  cases,  30  and  40  per  cent.  Take  coal,  for  instance,  where  we 
have  to.  load  and  haul  between  San  Francisco  and  San  Rafael  for  $1  per 
ton.  This,  coupled  with  the  enormous  passenger  and  freight  ferry  ter- 
minal expense,  really  reduces  our  freight  charge  below  that  charged  by 
many  Eastern  roads,  because  such  California  Distance  Tariff  does  not 
calculate  on  our  doing  any  handling. 

Another  serious  objection  to  this  proposed  amendment  is  the  change 
in  classification,  which  makes  an  entirely  different  classification  on 
many  articles  from  that  which  has  been  in  effect  on  this  road  for  many 
years. 

One  reason  for  the  heavy  cost  of  hauling  freight  over  the  North  Pacific 
Coast  Railroad,  is  the  cost  of  fuel.  Our  coal  last  year  averaged  us  a 
cost  of  $7  81  a  ton,  and  wood  $3  a  cord,  and  computing  two  cords  of 
wood  to  a  ton  of  coal,  our  coal,  even  on  the  very  best  proposition,  would 
cost  us  $6,  which  is  more  than  double  the  cost  of  coal  in  the  East. 
Labor  costs  much  more  here  than  it  does  in  the  East,  and  we  are  run- 
ning through  a  country  composed  chiefly  of  timber  land  and  dairies, 
giving  us  very  small  opportunity  to  obtain  return  freight  for  the  cars 
hauling  down  the  products  of  the  country  through  which  we  run.  We 
have  got  a  road  that  is  all  grades  and  curves,  and  are  really  without  a 
straight  line  in  it,  and  to  subject  us  to  the  same  terms  and  conditions 
of  a  road  that  is  perfectly  level,  running  through  a  thickly  populated 
country,  is  discriminating  against  us  to  the  crudest  extent. 

We  have  been  in  operation  now  since  1874,  and  have  never  yet  been 
able  to  declare  a  single  dividend  to  stockholders,  and  have  had  to  care- 


86  — 


fully  watch  every  cent  of  expenditure,  and  at  the  same  time  are  com- 
pelled to  spend  Vast  sums  every  year  maintaining  our  bridges,  all  of 
which  are  sustained  at  great  expense. 

Mr.  Earl:  How  long  is  your  road? 

Mr.  Russell:  Eighty-six  and  three  quarters  miles. 


Statement  of  L.  T.  Garnsey. 

(Representing  the  Redondo  Railway.) 

To  the  honorable  the  Senate  Committee  on  Constitutional  Amendments: 

Gentlemen:  In  reference  to  the  pending  bill  now  under  discussion 
before  your  honorable  body,  in  which  there  seems  to  be  a  disposition  on 
the  part  of  the  originators  to  arbitrarily  fix  the  rates  of  fare  and  traffic 
over  the  lines  of  roads  in  this  State,  we  beg  the  privilege  of  submitting 
our  views. 

Firstly,  in  making  such  rates  obligatory  and  a  part  of  the  Constitu- 
tion, in  our  judgment  is  not  only  ruinous  to  all  the  railroad  interests 
now  in  operation,  but  to  the  commercial  ^nd  agricultural  prosperity  and 
development  of  our  entire  country.  In  treating  of  this  question  it 
would  seem  that  the  spirit  of  selfishness  should  be  laid  aside,  and  that 
we  should  be  actuated  by  that  principle  of  justice  and  equity  that  gives^ 
to  each  and  every  man  a  fair  and  reasonable  compensation  for  his  labor 
and  the  money  invested.  In  digesting  the  present  bill  the  solution  of 
the  promoters  is  apparent.  To  kill  the  goose  that  laid  the  golden 
egg  seems  paramount  to  future  prosperity  and  to  all  other  issues.  The 
argument  advanced  by  these  so-called  promoters  is,  that  they  know  it 
all,  and  that  unsupported  statistics  have  greater  value,  and  should  be 
given  more  credence  and  weight,  than  actual  facts.  It  must  certainly 
be  evident  to  any  careful  observer  that  if  this  bill  now  before  your 
committee  passes,  it  will  work  great  hardships  upon  those  having  money 
invested  in  railways,  and  for  the  following  reasons: 

1.  It  is  impossible  to  compare  California  with  such  a  State  as  Kansas, 
because  of  the  totally  dissimilar  geographical  features.  The  topography 
of  California  is  broken  up  by  vast  mountain  chains  and  rivers,  which, 
because  of  these  mountains,  become  raging  torrents  when  fed  by  melt- 
ing snows  or  heavy  rainfalls,  or  both  together.  These  conditions,  first  of 
all,  compel  an  immense  outlay  of  money  in  construction,  in  order  to 
provide  for  tunnels,  heavy  cuts,  large  fills,  long  bridges,  strong  trestles, 
and  an  abundance  of  culverts  and  water  drains.  On  the  other  hand, 
Kansas  presents  a  comparatively  flat  country,  with  streams  which  may 
overflow  their  banks,  but  not  with  the  disastrous  consequences  following 
such  floods  in  a  country  of  high  mountains  and  low  valleys.  The  con- 
struction of  railways  in  the  kind  of  country  as  represented  by  Kansas 
is,  therefore,  much  cheaper  than  such  a  country  as  California. 

2.  The  cost  of  maintaining  and  operating  a  railroad  in  California  is 
very  much  greater  than  in  Kansas  or  any  other  country  of  like  charac- 
ter, because  of  the  tunnels,  bridges,  trestles,  grades,  etc.  The  pulling  of 
loads  up  hill  or  up  grade  burns  more  fuel  and  is  a  greater  strain  upon 
the  rolling  stock  than  through  flat  countries  by  quite  a  large  per  cent, 
besides  causing  more  wear  and  tear  upon  both  rolling  stock   and  track. 


3.  In  California  fuel  is  much  more  costly  than  in  the  Eastern  or  so- 
called  Western  States;  wages  are  very  much  higher,  and  material  of  all 
kinds  is  very  much  more  expensive. 

4.  One  other  item  is  of  great  importance,  and  one  that  should  receive 
careful  attention  in  the  consideration  of  this  subject,  namely,  the 
sparsely  settled  condition  of  California  as  compared  with  the  country 
east  of  the  Rocky  Mountains.  This  is  of  prime  importance,  because  the 
larger  the  volume  of  business  the  cheaper  the  business  can  be  handled. 
If  in  countries  thickly  settled  throughout  passengers  can  be  carried  for 
3  cents  a  mile  at  a  profit,  there  is  no  reason,  however,  why  they  should 
be  carried  for  the  same  rate  in  California,  even  though  there  were  no 
topographical  difficulties,  and  the  wages,  fuel,  etc.,  were  the  same;  but 
they  are  not,  they  are  higher,  much  higher.  Therefore  railroad  com- 
panies in  California  should  receive  much  larger  compensation  for  the 
same  amount  of  work  performed  than  those  situated  in  more  populous 
districts. 

5.  Another  and  more  important  fact  should  not  be  forgotten.  We 
require  more  railroads  to  develop  our  country  and  create  new  indus- 
tries. We  should  not  lose  sight  of  the  fact  that  to  encourage  capital 
should  be  one  of  the  incentives  in  governing  our  actions.  It  is  a  well- 
known  fact  that  capital  will  never  seek  investment  when  handicapped 
by  constitutional  amendments  that  in  effect  almost  absolutely  prohibit 
a  fair  return  on  the  money  invested.  In  other  words,  would  it  not  be 
in  effect  the  abandonment,  of  all  new  railroad  enterprises  for  years  to 
come,  thereby  retarding  progress  and  preventing  competition?  I  am  of 
the  opinion  that  such  would  be  the  result,  and  that  the  prosperity  to 
which  we  are  all  endeavoring  to  attain  would  be  best  subserved  by  that 
fostering  and  encouraging  attitude  that  would  enlist  new  capital,  build 
up  the  country,  and  place  our  noble  and  illustrious  State  in  the  front 
rank  of  sisterhood,  where  she  rightfully  belongs. 

L.  T.  GARNSEY, 
Representing  Redondo  Railroad  Co. 

The  above  is  submitted  as  my  views,  as  representing  the  Redondo 
Railway  Company.  In  my  individual  capacity  I  will  say,  I  am  not 
biased  in  favor  of  railroads,  as  my  private  interests  in  horticulture  and 
agriculture  are  at  least  95  per  cent  greater  than  in  railroad  enterprises. 
My  sole  object  is  to  get  better  results  and  a  larger  income  from  my 
investments,  and  a  more  extended  market  for  my  products,  thereby  I 
wish  to  encourage  any  and  all  enterprises  that  will  lead  to  that  end. 

It  appears  to  me  that  the  nucleus  of  our  future  success  is  more  and 
better  railroad  facilities,  thereby  creating  competition  which  will  force 
rates  and  tariff"  to  seek  their  proper  level,  without  the  aid  of  ambiguous 
legislation.  By  the  way  of  illustrating,  permit  me  to  call  your  atten- 
tion to  the  following  facts  which  appear  pertinent  to  the  case.  For 
many  years  I  was  the  largest  wholesaler  and  shipper  of  foreign  and 
domestic  fruits  in  a  number  of  New  York's  flourishing  interior  cities. 
This  is  an  industry  in  which  we  in  California  are  now  largely  inter- 
ested, and  which  bids  fair  to  outrank  all  other  products  of  the  State. 
By  virtue  of  circumstances,  I  was  forced  to  give  more  or  less  attention 
to  railroad  rates,  to  overcome  JSew  York  city's  competition  and  protect 
my  trade. 


—  88  — 

In  my  investigation  of  rates  in  California  as  compared  with  classifica- 
tions and  rates  East  on  these  goods,  I  find  them  scarcely  any  higher, 
and  in  some  cases  proportionately  lower.  For  instance,  the  rate  on 
oranges  and  lemons  from  Colton  and  Redlands  to  San  Francisco  is  but 
$75  per  car  of  twenty  thousand  pounds,  a  haul  of  five  hundred  and  fifty 
miles;  from  Santa  Ana,  Tustin,  and  thereabouts,  a  haul  of  five  hundred 
and  twenty  miles,  $60  per  car.  On  the  same  quantity  of  goods  East  for 
a  number  of  years,  I  considered  myself  very  fortunate  in  getting  them 
carried  the  distance  of  two  hundred  miles  for  $50,  or  a  fraction  above 
one  third  the  distance  at  two  thirds  the  price;  you  will  notice  the  pro 
rata  rate  being  largely  in  favor  of  California.  Thetariff  on  the  same  class 
of  goods  from  Colton,  Redlands,  and  thereabouts,  to  Chicago,  a  distance 
of  over  two  thousand  seven  hundred  miles  by  the  Southern  Pacific  Rail- 
road, is  $250  per  car  of  twenty  thousand  pounds,  which  is  very  low, 
considering  that  nearly  all  fruits  of  this  character  are  shipped  in  refrig- 
erator cars  of  twice  the  weight  of  ordinary  box  cars,  requiring  double 
the  power  to  make  the  haul,  and  as  I  understand  it,  the  larger  portion 
of  these  cars  return  empty  for  re-loading,  adding  thereto  another  large 
expense.  Estimating  this  with  the  immense  grades,  large  cost  of  main- 
tenance, and  operating,  and  the  much  greater  cost  of  fuel,  it  would 
in  my  judgment,  seem  that  present  rates  were  reasonable,  and  that  ship- 
pers were  fairly  and  honorably  treated. 

Respectfully  submitted. 

L.  T.  GARNSEY. 


Statement  of  W.  S.  "Waterman. 

(Of  the  San  Diego,  Cuyamaca,  and  Eastern  Railway.) 

Gentlemen:  I  do  not  know  that  I  have  anything  new  to  present  to 
this  committee.  I  wish,  however,  to  join  with  those  who  have  preceded 
me  in  objecting  to  the  passage  of  the  proposed  amendment.  I  also  wish 
to  object  to  the  passage  of  any  law  that  will  have  a  tendency  to  bring 
the  railroad  into  politics. 

I  represent  the  San  Diego,  Cuyamaca,  and  Eastern  Railway,  which 
runs  from  San  Diego  eastward  over  the  mesas,  and  through  Spring 
Valley  and  El  Cajon  Valley.  These  valleys,,  and  also  the  mesa  lands, 
are  fertile  and  productive,  and  are  under  the  waters  of  the  San  Diego 
Flume  Company,  and  the  country  is  improving  rapidly.  The  road  was 
built  for  the  development  of  the  country  through  which  it  runs.  It  was 
also  the  intention  of  the  projectors  to  build  the  road  to  a  connection 
with  the  Southern  Pacific  Railroad,  at  or  near  Salton.  This  road  was 
built  in  1888  and  1889,  and  was  formally  opened  in  March,  1889,  to 
Lakeside,  a  distance  from  San  Diego  of  twenty-two  miles.  Later  on 
3.37  miles  additional  was  built,  to  Foster.  While  the  road  has  always 
done  considerable  business,  its  rates  of  freight  and  passenger  fares  have 
been  comparatively  low.  The  passenger  rate  is  4  cents  per  mile,  and 
our  freight  rates  are: 

First  class 22.4  cents  per  ton  per  mile. 

Second  class ....20.0  cents  per  ton  per  mile. 

Third  class _ _ ...14.2  cents  per  ton  per  mile. 

Fourth  class 12.0  cents  per  ton  per  mile. 

Fifth  class 9.6  cents  per  ton  per  mile. 

Average _ 142  cents  per  ton  per  mile. 


i 


—  89  — 

'CIas3  A - 9.fi  cents  per  ton  per  mile. 

Class  B 8.8  cents  per  ton  jier  mile. 

Class  C 7.2  cents  per  ton  per  mile. 

Average 8.2  cents  per  ton  per  mile. 

Baisins 8.3  cents  per  ton  per  mile. 

The  proposed  rates  are  from  25  per  cent  to  45  per  cent  lower  than 
these.  In  spite  of  low  rates  the  road  has  always  paid  its  running 
■expenses,  has  put  some  money  into  betterments  each  year,  and  has  been 
paying  for  its  rolling  stock  in  payments  amounting  to  about  -$500  per 
month.  The  gross  earnings  are  $1,476  25  per  mile,  and  the  cost  of 
■operating  per  mile  $890.  Of  the  gross  earnings,  47  per  cent  is  from 
passengers,  and  the  balance  is  from  freight.  I  run  two  trains  each  way 
a  day,  all  being,  when  occasion  demands  it,  mixed  passenger  and  freight 
trains.  The  freight  which  we  haul  out  of  San  Diego  is  general  mer- 
chandise, lumber,  piping,  and  building  materials.  The  freight  which  we 
ihaul  into  San  Diego  is  rock,  hay,  grain,  wood,  wool,  and  fruit?  of  various 
kinds.  The  largest  one  article,  excepting  rock,  is  hay,  followed  by 
raisins,  and  then  by  oranges  and  lemons.  There  are  several  thousand 
acres  of  young  fruit  trees  just  now  coming  into  bearing,  which  are 
beginning  to  swell  our  freight  receipts.  Regarding  the  rock  -which  we 
haul,  I  wish  to  say  that  it  is  used  for  street  paving,  building  material, 
and  for  cemetery  work.  From  this  source  alone  we  expect  to  double 
our  present  earnings,  possibly  more  than  that.  From  the  prospects 
before  us  we  have  a  right  to  expect  to  belong  to  that  class  of  roads  that 
earn  $4,000  per  mile  and  upwards,  and  that  in  a  very  few  years.  For  that 
reason  we  consider  that  we  have  as  much  interest  in  this  proposed  amend- 
ment as  any  road  has.  This  road,  though  it  has  done  better  than  many 
roads  in  this  State,  has  yet  never  paid  interest  on  the  money  invested 
^n  it — some  $400,000.  The  interest  on  this  amount  for  the  four  years  of 
,|fche  road's  existence  is  $100,000.  We  certainly  have  a  right  to  consider 
fthe  accrued  interest  as  an  investment,  and  when  this  road  earns  money 
I  enough  to  pay  interest  on  $400,000  and  the  then  accrued  interest,  I 
■i  believe  we  are  entitled  to  it,  and  also  to  something  more,  for  the  risk  we 
have  taken  in  building  a  road  to  develop  a  countr}'^  before  the  country 
could  pay  for  its  own  development.  Furthermore,  I  believe  the  patrons 
of  this  road  think  in  the  same  way.  There  is  a  general  feeling  of  satis- 
faction among  our  patrons  regarding  our  rates  and  our  service. 

Even  if  this  road  earned  over  $4,000  per  mile,  when  the  expenses,  cost  of 
accidents,  cost  of  replacing  worn-out  material,  etc.,  are  all  considered, 
the  profits  to  the  stockholders  will  be  small  enough  to  satisfy  anybody. 
It  is  a  mistake  to  think  that  all  the  railroad  has  to  do  is  to  sit 
•j^ow'n  and  let  business  come  to  it.  It  must  look  after  business,  and  w'ork 
up  and  encourage  business,  just  as  one  must  do  in  any  other  line.  Many 
a  time  a  good  business  is  secured  simply  by  hard  work.  What  is  the 
object  of  hard  work,  if  by  it  one  is  to  decrease  their  net  income?  The 
absurdity  has  already  been  brought  to  your  notice  of  placing  a  road  in 
a  position  where,  if  it  increase  its  business  it  diminishes  its  income.  I 
also  wish  to  ask  you  if  you  think  such  a  state  of  affairs  would  be  bene- 
ficial to  the  country  through  which  any  special  road  runs?  I  think  it 
would  be  decidedly  detrimental,  and  I  believe  you  think  the  same. 

We  are  also  contemplating  an  extension  of  this  road  into  valleys  that 
are  further  up  in  the  mountains.  The  question  naturally  arises,  is  it 
safe  to  invest  more  money  in  an  enterprise  that  is  subjected  to  this  kind 


—  90  — 

of  adverse  legislation?  Certainly  not.  I  would  not  put  my  own 
money  into  such  a  scheme,  and  I  believe  other  people  would  not,  either. 
It  seems  to  me  that  the  result  of  this  kind  of  agitation  will  be  to  make 
people  backward  about  investing  money  in  this  State,  and  I  am  equally 
satisfied  that  the  passage  of  such  a  law  would  effectually  and  forever 
stop  railroad  building  in  California.  We  all  wish  more  railroads,  and 
I  sincerely  hope  that  this  Legislature  will  not  do  anything  either  to 
hamper  those  already  built,  or  to  have  a  tendency  to  keep  other  rail- 
roads out  of  the  country.  I  might  add,  in  closing,  that  I  consider 
arbitrary  fixed  rates,  such  as  those  proposed,  as  entirely  wrong.  If 
fares  and  freights  must  be  regulated  in  some  way,  let  them  be  regulated 
first,  on  the  cost  of  road,  second,  on  the  cost  of  operating  and  main- 
taining. 

Statement  of  Grove  L.  Johnson. 

(Representing  the  Visalia  and  Tulare  Railroad.) 

Mr.  Chairman:  I  appear  here  to-night  in  behalf  of  the  Visalia  and 
Tulare  Railroad  Company,  which  is  what  may  be  denominated  a  little 
railroad.  It  is  only  eleven  and  a  half  miles  long.  It  is  owned  entirely 
by  residents  of  Visalia  and  Tulare.  It  is  owned  by  the  people.  There  is 
no  question  of  foreign  capital.  There  is  no  question  of  wealthy  monop- 
olists, no  question  of  powerful  corporations.  Simply  a  question  of  little 
railroad,  owned  by  the  people,  built  for  the  people,  and  used  by  the  people* 
and  being  part  of  the  people,  appears  before  you  as  representatives  of  the 
people  to  ask  that  it  be  not  injured  by  what  it  deems  improper,  impolitic, 
and  unwise  legislation.  This  road  was  built  more  especially  for  the  benefit 
of  the  people  of  Visalia  and  vicinity.  To  the  people  of  Visalia  this  road 
audits  competitor  was  an  absolute  necessity.  We  have  a  map  here — the 
map  that  is  published  by  the  Railroad  Commissioners — by  which  is  shown 
location  of  Visalia  and  the  location  of  this  road,  and  location  of  branches 
of  the  Southern  Pacific.  I  will  explain  it  by  saying  that  Visalia  is  situ- 
ated in  the  center  of  a  loop,  formed  by  two  branches  of  the  Southern 
Pacific,  and  deriving  no  benefit  from  either  branch,  standing  by  itself, 
isolated,  the  Southern  Pacific  a  positive  injury  to  it — of  absolutely  no- 
value — leaving  it  some  miles  to  the  east,  and  some  miles  to  the  west. 

The  people  of  Visalia,  then,  in  order  to  obtain  railroad  communica- 
tion, were  obliged  to  build  railroads  for  themselves.  One  was  built 
from  the  town  of  Goshen,  on  the  line  of  the  Southern  Pacific,  extending 
to  Visalia,  which  is  known  as  the  Visalia  Railroad,  which  is  seven  miles 
long.  Another  was  built,  commencing  at  a  station  known  as  Tulare, 
and  running  to  Visalia,  which  is  known  as  the  Visalia  and  Tulare  Rail- 
road, eleven  and  one  half  miles  long.  Those  two  roads  were  built,  both 
of  them,  by  the  people,  and  they  are  absolutely,  as  I  said,  a  necessity 
for  Visalia,  in  order  that  the  people  of  Visalia  may  obtain  advantages 
of  railroad  communication;  they  are  a  necessity  to  the  people.  They 
are  not  in  any  mannner.  particularly  the  railroad  that  I  represent 
to-night,  interested  in  or  connected  with  the  Southern  Pacific  Company, 
excepting  as  being  a  feeder  or  being  fed  by  the  company.  They 
exchange  business  with  it,  the  same  as  other  business  men  exchange 
business  with  men  of  their  own  character,  and  men  engaged  in   the 


—  91  — 

same  line  of  business.  It  has  no  affiliations;  it  is  not  controlled;  its 
stock  is  not  owned  by  the  Southern  Pacific  Company;  it  is  not  managed 
by  it,  or  controlled  by  it,  or  responsible  for  anything  it  does. 

This  road,  the  Visalia  and  Tulare  Railroad,  cost  about  $115,000,  in 
round  numbers.  It  has  a  bonded  indebtedness  of  -$50,000,  carrying  7 
per  cent  interest;  it  never  has  paid  any  dividends;  it  lives  in  great 
expectations;  it  has  hopes  for  the  future.  So  far,  no  one  has  ever  com- 
plained of  it.  It  does  not  corrupt  any  newspapers  or  members  of  the 
Legislature,  nor  anybody.  It  does  not  interfere  with  anybody,  but  it 
lives,  as  I  have  said,  upon  expectations  of  what  the  country  will  become. 
Within  the  last  few  years  some  6,000  acres  in  the  immediate  vicinity 
have  been  set  out  in  fruit  trees.  The  expectations  of  the  owners  of  this 
company,  and  the  owners  of  the  other  company  is  that  in  a  few  years 
the  country  will  increase  in  population  by  more  than  double — quad- 
ruple— and  the-  business  derived  from  carrying  the  fruit  from  this 
immense  orchard  will  raise  their  revenues,  and  enable  them  to  not  only 
pay  their  interest,  but,  perhaps,  to  obtain  some  little  return  on  their 
money.  They  have  in  contemplation  the  extension  of  their  line  from 
Visalia  into  the  mountains,  for  the  purpose  of  holding  the  local  trade. 
As  it  is  now,  a  large  number  of  people  in  that  vicinity  seek  the  coast 
to  get  rid  of  the  heat  of  summer.  Their  proposal  is  to  extend  the  road 
into  the  mountains,  to  make  summer  resorts  there,  where  not  only  the 
people  of  Visalia  and  that  vicinity  will  go,  but  where  people  from  San 
Francisco,  seeking  a  summer  resort,  will  also  go.  They  will  benefit  the 
people  not  only  of  that  vicinity,  but  of  the  whole  State.  This  they  are 
willing  to  do  and  expect  to  do,  if  their  business  is  allowed  to  continue. 
This  road,  the  Visalia  and  Tulare  Railroad,  and  the  Visalia  Railroad, 
are  almost  the  only  instances  in  this  State  where  roads  are  directly  in 
competition  with  each  other,  and  I  may  say  this  is  the  only  instance  in 
the  State  where  the  competition  is  such  that  if  this  bill  becomes  a  law, 
one  railroad  will  be  ruined,  and  perhaps  the  other  railroad  will  be 
benefited.  The  competition  between  the  roads  is  such  that  although 
one  is  seven  miles  long,  and  the  other  eleven  and  one  half  miles  long, 
they  charge  the  same  rates  of  fares,  and  the  same  rates  of  freight,  and 
by  reason  of  it  they  will  be  amenable  to  the  same  rules  if  this  bill 
becomes  a  law. 

Now,  if  you  will  pardon  me,  before  going  into  detail  more,  in  reference 
to  these  two  roads,  and  in  reference  to  the  effect  upon  them  of  this 
proposed  legislation,  I  will  say  a  few  words  of  a  general  character,  in 
reference  to  this  proposed  legislation.  Now,  this  resolution  is  a  great 
and  a  radical  change  in  the  law  of  California.  As  you  all  know,  in 
1879,  the  people  of  this  State  adopted  what  is  known  as  the  New  Con- 
stitution, which  was  a  new  departure,  and  which  was  supposed  to  be 
the  adoption  of  a  Constitution  that  would  take  the  railroad  question  out 
of  politics;  that  would  take  the  railroad  out  of  legislation,  and  would 
place  the  railroad  question  with  a  Commission  of  three  gentlemen, 
elected  by  the  people  of  the  State,  and  in  that  way  it  would  be  in  the 
hands  of  men  who  would  make  it  a  study.  In  that  way  it  would  be  in 
the  hands  of  men  who  would  attend  to  it,  and  in  that  Avay  the  peo))le 
would  be  freed  from  the  railroad  question,  and  the  time  of  the  Legisla- 
ture would  not  be  consumed,  nor  the  members  vexed  in  considering  a 
question  fraught  with  so  much  difficulty,  and  which  from  the  wreck  of 
reputations  in  the  history  of  this  State,  is  fraught  with  so  much  danger 
to  the  members  of  the  Legislature. 


—  92  — 

It  was  also  intended  by  the  Constitution  that  there  should  be  no 
more  class  distinctions,  no  more  arbitrary  distinctions  in  this  State- 
that  everything  should  be  put  on  a  level;  everything  should  be  put 
on  an  equality.  .-There  should  be  no  more  special  legislation;  no  more 
legislation  directed  at  one  particular  thing,  one  particular  company,  one 
particular  interest,  one  particular  corporation,  or  one  particular  set  of 
men;  that  everything  should  be  general  in  its  nature — general  in  its 
character.  So  anxious  were  the  framers  of  this  Constitution  to  have  that 
principle  ingrafted  in  the  Constitution,  that  they  took  particular  pains, 
in  various  sections  of  the  Constitution,  to  enact  that,  and  say  that  special 
legislation  was  prohibited,  and  to  provide  in  the  Constitution  for  almost 
everything  the  people  needed,  in  order  that  there  might  be  no  legislation, 
and 'in  the  articles  providing  what  the  Legislature  could  and  could  not 
do  in  reference  to  special  legislation,  it  winds  up  by  saying  they  shall  not 
pass  local  or  special  laws  in  any  case  where  a  general  law  will  apply, 
showing  it  was  the  object  and  aim  of  the  people  of  the  State,  at  that  time, 
to  prevent  any  more  special  legislation,  any  more  arbitrary  distinctions, 
any  more  class  distinctions,  and  leave  everything,  as  I  said,  on  an 
equality. 

Now,  for  nearly  fourteen  years  we  have  lived  under  that  Constitution. 
Some  people  thought  that  it  was  not  a  good  Constitution.  Some  people 
thought  that  it  was  defective;  that  it  was  injurious  to  the  State;  but  the 
State  has  prospered,  the  State  has  succeeded,  and  the  forms  of  special 
legislation  that  are  growing  so  powerful  and  strong  in  California  have, 
to  a  great  extent,  been  curbed,  and  the  State  to-day  is  more  prosperous 
than  ever  before.  And  while  I  was  one  of  those  who  opposed  the  new 
Constitution,  I  am  forced  by  the  logic  of  my  convictions  to  admit  that 
the  crusade  against  special  legislation — the  laws  against  special  legisla- 
tion— the  constitutional  enactment  against  special  legislation — has 
resulted  in  good  to  the  State.  -Now,  after  living  under  it  for  fourteen 
years,  it  is  sought  to  change  it.  It  is  sought  to  make  a  radical  change — 
wonderful  change  in  what  for  fourteen  years,  nearly,  has  been  the  law 
in  this  State.  It  is  sought  now  to  have  some  more  class  legislation — 
some  more  arbitrary  distinctions — some  more  distinctions  not  based 
upon  anything,  except  a  desire  to  have  a  distinction.  Now,  when 
anybody  asks  for  a  change  to  be  made,  especially  such  a  great  and  rad- 
ical change  as  this,  good  reasons  should  be  offered.  When  any  one  is 
asked,  and  the  members  of  the  Legislature  are  asked  to  impose  arbitrary 
classifications  upon  the  peo])le,  good  reasons  should  be  given.  Is  not 
that  true,  and  is  it  not  true  for  two  reasons — first,  when  any  one  asks  to 
make  a  change,  there  ought  to  be  a  reason  for  it.  If  a  man  buys  a  new 
coat,  he  has  a  reason  for  it;  if  he  buys  a  new  horse,  he  has  a  reason  for 
it;  if  he  changes  his  condition  in  life^,  and  gets  married,  he  has  a  reason 
for  it. 

In  everything  we  do  there  is  a  reason  for  it,  and  now,  when  you 
come  to  make  an  arbitrary  distinction,  a  distinction  without  a  reason, 
&  distinction  founded  simply  upon  feeling,  then  reasons  ought  to  be 
given  that  will  be  satisfactory,  not  only  to  the  persons  asking  us  to 
make  these  distinctions,  but  satisfactory  to  every  person  that  votes  for 
them,  and  satisfactory  to  the  people  that  are  to  be  oppressed  or  bene- 
fited by  this  arbitrary  distinction.  Now,  Section  3  of  this  present  reso- 
lution provides  arbitrarily  for  two  classes  of  railroads  in  California— 
arbitrarily  sets  up  two  classes  of  railroads:  one.  those  earning  annuallv 


—  93  — 

over  $4,000  per  mile,  and  second,  those  earning  less  annually  thaii 
•HjOOO  per  mile.  Now,  why  is  this?  It  mal5:es  by  one  sweep  of  the  pen 
two  classes  in  this  State.  It  divides  the  railroads  of  this  State  in  twain^ 
exactly  as  you  would  cut  a  piece  of  bread  or  cheese  with  a  knife.  Now, 
why  is  it?  Has  any  reason  been  given  for  it?  If  so,  what?  Is  there 
any  such  consensus  of  opinion  among  railroad  men,  amongst  people  who^ 
have  given  their  time,  their  money,  and  their  labors  to  the  elucidation 
of  railroad  questions,  as  convinces  the  members  of  this  railroad  com- 
mittee that  $4,000  is  the  necessary  legitimate  result  of  the  full  fruition 
of  labor  in  railroads? 

If  so,  when,  and  where,  and  how?  This  is  an  arbitrary  distinction, 
■t4,000  per  mile.  It  is  asked  of  you  that  you  make  that  distinction.  It 
is  asked  of  you  that  you  say  b}^  your  votes  that  $4,1.00  is  the  limit. 
That  up  to  $4,000  a  mile  the  Legislature  can  act  in  reference  to  rail- 
roads. Over  $4,000  a  mile  it  cannot  act.  Why?  Have  any  facts  and 
figures,  any  proof,  or  any  evidence  been  introduced  here?  Has  there- 
been  any  legislative  or  congressional  committee  and  their  report  been 
presented  to  you  which  shows  that  this  limit  is  a  necessary  and  legiti- 
mate limit?  Is  it  true  that  the  railroad  which  earns  more  than 
$4,000  per  mile  in  gross,  should  be  treated  any  different  from  the  railroads 
which  earn  less  than  that  amount?  If  so,  why?  It  is  an  arbitrary  dis- 
tinction. It  is  a  distinction  not  based  on  anything  but  the  mere 
arbitrary  will  of  the  Legislature.  Why  not  take  $5,000,  $3,500,  or  $6,000? 
Is  there  any  reason  given  for  it?  Is  there  any  reason  given  why  this 
should  be  put  in  the  Constitution  and  say  that  $4,000  per  mile  is  the 
proper  limit  for  railroads? 

We  have  been  told  in  the  past  that  it  was  wise  to  limit  the  number 
of  acres  of  land  that  a  man  could  own.  We  are  told  so  to-day.  But  no. 
man  j^et  has  agreed  upon  the  number  of  acres  a  man  should  own.  I 
have  heard  men  owning  forty  thousand  and  fifty  thousand  acres  argue 
strenuously  in  favor  of  limitation  upon  the  ownership  of  land,  but  no 
man  yet  was  in  favor  of  reducing  the  number  of  acres  that  he  held, 
except  by  sale.  So  in  this,  is  there  any  real  reason  for  taking  $4,000? 
I  have  listened  attentively  to  the  arguments  here.  I  have  read  every- 
thing that  has  been  published  by  the  newspapers  in  regard  to  it.  I 
have  not  seen — I  have  not  heard  it.  I  have  heard  of  people  saying — 
making  an  argument  addressed  to  the  committee  in  favor  of  the  bill,  but 
what  I  am  speaking  of  is,  where  is  the  evidence,  where  are  the  facts, 
where  are  the  figures? 

Some  of  you  gentlemen  I  know  to  be  lawyers.  One  Senator  I  am  not 
acquainted  with.  I  do  not  know  his  profession.  But  you  lawyers 
know  that  persons  seeking  a  thing,  having  the  affirmative,  must  intro- 
duce proof,  because  the  rule  of  law  is  that  he  who  has  a  complaint  must 
file  proof.  Has  any  proof  been  introduced  here,  conclusive  in  this 
matter?  If  so,  where,  and  when,  and  how?  Is  any  rule  which  makes 
a  railroad  earning  less  than  $4,000  better  or  worse  than  one  earning 
over — does  it  make  them  any  more  wicked?  Is  the  railroad  earning 
less  than  $4,000  less  liable  to  be  corrupted  than  the  one  earning  more 
than  $4,000?     If  so,  is  that  to  be  the  maximum  and  the  limit? 

And  up  to  $4,000  per  mile  you  are  honest;  over  $4,000  per  mile  you 
are  dishonest.  Up  to  $4,000  per  mile  you  can  be  trusted  by  the  Legis- 
lature of  this  State.  Over  $4,000  per  mile  you  become  a  highwayman^ 
with  your  hand  against  every  one,  with  the  desire  to  rob,  and  to  get  the 


—  94  — 

best  of  the  people.  This  arbitrary  decision  of  over  $4,000  per  mile,  jhy 
i.  it  on  that  basis?  It  is  such  a  radical  departure  such  a  tremendous 
change,  and  it  makes  such  an  arbitrary  distinction,  that  it  seems  to  me 
that  Ue  very  best  of  reasons  should  be  given  lor  it-the  very  best  of 
reasons,  not  the  mere  statement  of  opinions.  I  grant  you  the  eminent 
ability  of  the  gentleman,  as  well  as  every  gentleman  in  favor  of  this 
bill  I  grant  vou  all  that  may  be  said  by  any  person  in  reference  to 
the  "years  that  he  has  spent  in  railroad  study.  I  grant  everything  that 
mav  be  said  as  to  his  meniory-everything  that  his  friend?  may  say  of 
him.  I  admit,  I  grant  it  all,  and  yet  1  say  that  his  opinion  ought  not 
to  be  received  by  this  committee  as  conclusive.  .  •  ,      n 

If  there  is  to  be  a  "bed  of  Procrustes"  m  this  State  upon  which  all 
railroads  shall  be  placed,  and  should  they  reach  over  $4,000  per  mile 
thev  shall  be  cut  in  two,  as  were  Ihe  guests  of  Procrustes  in  ancient  times. 
there  ou^-ht  to  be  some  good  reason  for  it.  The  only  reason  adduced 
here  for  you  gentlemen  coVisidering  this  bill,  is  that,  like  Procrustes,  you 
have  got  the  power  to  do  it;  that  is  all;  no  other  reason  on  earth.  You 
have  the  power  to  do  it,  therefore  should  do  it.  Is  that  a  reason  to  be 
addressed  to  members  of  the  Legislature?  Should  it  be  a  conclusive 
r.-ason  for  changing  the  legislation  of  the  State,  for  changing  the  Con- 
stitution of  this' State,  for  overturning  the  work  of  the  people,  for  over- 
turning the  way  the  people  have  lived  for  the  past  fourteen  years,  and 
making  an  arbitrary  distinction?  This  is  something  which  should  be 
justified— something  that  you  gentlemen  will  be  called  on  to  justify  on 
your  return  to  your  constituents,  because  your  votes  here  are  simply  the 
expression  of  your  individual  ideas. 

You  represent  some  persons.  You  must  report  to  your  constituents. 
Are  thev  interested  in  this?  If  so,  Avhere  is  the  evidence?  Are  they 
believers  in  these  reasons?  If  «so,  where  and  how  have  they  been  con- 
vinced, and  how  shall  you  be  convinced?  Now,  I  argue  the  question, 
whether  before  the  committee,  or  before  a  Court,  upon  what  I  believe  to 
be  the  correct  basis  and  the  legal  ground.  I  ditier  from  the  learned 
gentleman  who  addressed  the  committee  some  three  nights  ago.  I  grant 
your  power.  I  admit  that  the  Legislature  has  the  power  to  grant  this 
constitutional  amendment.  I  admit  the  people  have  the  right  to  adopt 
it.  I  admit,  if  the  people  adopt  this  Constitution,  it  becomes  a  Consti- 
tution. Special  charters,  general  charters,  special  laws,  general  laws, 
special  privileges  and  general  privileges,  the  charter  of  a  corporation 
which  forms  a  little  road,  the  charter  of  a  corporation  which  forms  a 
large  road,  the  charter  of  a  corporation  or  a  company  that  is  transacting 
a  few  thousand  dollars  a  3^ear,  or  of  a  company  that  is  transacting  hun- 
dreds of  millions  of  dollars  a  year — all  become  amenable  to  the  Consti- 
tution, in  my  judgment. 

If  tliis  resolution  passes  the  Legislature,  and  if  the  people  ratify  it, 
it  becomes  our  Constitution,  and  all  must  bow  down  and  obey  it;  and 
to  take  our  special  charters  is,  to  my  mind,  somewhat  misleading.  And 
inasmuch  as  you  do  have  that  power,  inasmuch  as  the  people  have  the 
power  to  adopt  this  Constitution,  and  inasmuch  as  if  the  people  do  adopt 
this  Constitution,  it  strikes  so  powerfully,  it  becomes  so  drastic,  it  is 
such  a  wonderful  change,  and  it  does  bear  with  such  a  heavy  hand  on 
all  the  railroads  in  this  State,  that  more  than  ever  you  should  be  very 
careful,  it  seems  to  me,  and  you  should  ask  for  the  very  best  reasons  in 
the  world.     A  mere  opinion  should  not  always  count.     No  matter  how 


—  95  — 

learned  the  man  may  bo  who  saN^s  this  ought  to  pass,  there  should  be 
facts,  there  should  be  figures,  there  should  be  reasons  given  for  it.  As 
for  the  abolishment  of  the  Railroad  Commission,  I  will  speak  of  that  a 
little  later;  but  first,  I  want  to  call  your  attention  to  the  effect  that  this 
will  have  on  the  Visalia  and  Tulare  Railroad  Company,  if  it  should  be 
adopted.  As  I  said  before,  the  Visalia  and  Tulare  Railroad  is  in  direct 
competition  with  the  Visalia  Railroad.  The  rates  are  necessarily  the 
same. 

The  Visalia  Railroad  is  seven  miles  long.  It  charges  50  cents  for  fare 
from  Goshen  to  Visalia.  The  Visalia  and  Tulare  Railroad  is  eleven  and 
a  half  miles  long,  and  charges  50  cents  for  passengers  from  Tulare  to 
Visalia.  The  rates  on  freight  are  the  same  on  both  roads.  Now,  then, 
they  are  in,  as  I  say,  direct  compptition.  Each  road  does  just  about  the 
same  amount  of  business.  The  Visalia  Railroad  being  the  shorter  rail- 
road, has  therefore  larger  apparent  gross  earnings  per  mile.  The  Visalia 
Railroad  mileage  being  only  seven  miles,  its  gross  earnings  are  about 
$3,000  per  mile.  The  Visalia  and  Tulare  Railroad  being  longer — its 
mileage  eleven  and  a  half  miles — its  earnings  are  less  than  .$2,000  per 
mile,  although  it  receives  about  the  same  amount  for  freight  and  passen- 
ger traffic  as  does  the  Visalia  Railroad.  The  business  prospects  of  both 
of  them  are  about  the  same.  They  both  expect  an  increase  in  popula- 
tion; they  both  expect  to  derive  money  from  the  fruit  trees  that  I  spoke 
of;  from  the  people  that  are  expected  there;  from  the  subdivision  of  the 
large  land  holdings.  And  in  about  two  years  it  is  confidently  expected 
by  the  owners  of  the  Visalia  Railroad  that  its  gross  earnings  will  be 
over  $4,000  per  mile;  but  the  Visalia  and  Tulare  Railroad  will  not  reach 
that  amount.  Being,  as  I  said,  eleven  miles  long,  and  charging  exactly 
the  same  rates,  it,  in  all  human  probability,  cannot  hope  to  be  more 
than  $3,000  per  mile  at  the  same  .time  the  Visalia  Railroad  reaches 
$4,000  per  mile.  Just  the  moment  that  the  Visalia  Railroad  reaches 
$4,000  gross  earnings  per  mile,  then  the  rates  must  be  lowered,  because 
this  constitutional  enactment  says  so,  and  its  rates  of  fares  will  be 
lowered  about  60  per  cent,  its  rates  on  freight  lowered  36  per  cent,  in 
order  to  conform  to  this  constitutional  provision.  Now,  the  Visalia  and 
Tulare  Railroad  will  not,  at  that  time,  be  earning  $4,000  per  mile.  It 
will  only  be  earning  $3,000  per  mile  under  the  most  favorable  auspices, 
and  with  the  most  favorable  results,  and  yet  it  must  also,  by  reason  of 
the  law  of  competition,  lower  its  rates  to  the  rates  which  will  be  charged 
by  the  Visalia  Railroad,  because  it  is  in  direct  competition;  and  it  can- 
not do  any  business  if  it  charges  more  than  the  Visalia  Railroad,  under 
the  provision. 

And  if  the  Visalia  Railroad,  under  the  constitutional  provision, 
charges  only  22  cents  for  people  to  go  to  Visalia,  the  Visalia  and  Tulare 
Railroad  cannot  charge  you  more  than  22  cents,  either,  because  if  it  does 
charge  more,  it  will  do  no  business.  If  the  Visalia  Railroad  reduces  its 
charges  36  per  cent,  as  it  will  necessarily  be  obliged  to  do,  immediately 
the  Visalia  and  Tulare  Railroad  must  reduce  its  rates  36  per  cent,  in 
order  to  compete  with  it,  and  then  the  Visalia  and  Tulare  Railroad, 
which  at  that  time  earned,  if  it  earned  as  much  as  its  projectors  hope  it 
will,  which  will  be  $3,000  per  mile,  under  those  rates  it  will  be  reduced 
immediately  down  to  $1,200  or  $1,300  per  mile,  and  will  be  obliged  to 
suspend  business.  It  will  simply  have  to  quit,  to  use  the  language  of 
the  street.     It  will  have  to  stop,  being  brought  into  competition  imme- 


—  96  — 


diatelv  with  tlii^  otlun-  road-in  direct  competition.     The  rates  as  jon 

LTu^o^T^r^pT^o  e'tli:  bill-tS petition  is  the  surest  thing  to 
?eLni  ate  char.es  If  railroads.  We  are  told  that  :n  he  East  one  reason 
vh  'Ls  are  ditrerent  there  is  because  of  the  great  competition  We 
al  -re^o-nize  it.  It  is  the  same  with  the  railroad  business  as  with  any 
ohei  business.  If  it  was  not  for  the  competition  between  lawyers,  it 
w^ild  be  almost  impossible  to  pay  their  exorbitant  charges.  AikI  so  i 
9  with  railroads.  Competition  is  what  makes  business;  and  I  don  t 
care  how  politic  a  man  may  be,  I  don't  care  how  much  a  man  may 
desire  to  have  a  little  railroad  he  believes  in  succeed,  if  he  can  ride  oyer 
an  opposition  road  for  22  cents  he  is  not  going  to  pay  oO  cents  to  ride 
over  a  road  owned  and  controlled  and  operated  by  his  friend. 

It  is  not  human  nature,  and  this  Visalia  and  Tulare  Railroad  will  be 
oblicred  to  reduce  its  rates  of  freight  and  fare  to  meet  the  competition 
of  the  Visalia  Railroad,  which  has  been  obliged  to  reduce  it^s  rates  by 
reason  of  this  constitutional  provision.  Now,  is  that  fair?  is  it  right  r* 
Is  it  iusf?  I  don't  speak  of  any  vested  rights.  I  don't  wish  you,  gentle- 
men of  this  committee,  to  understand  me  as  saying  that  I  think  any 
man  has  the  right  to  stand  up  here  and  say,  "  you  can't  take  this  away. 
I  grant  that  you  can  do  it.  I  grant,  and  I  understand  that  you  have 
tlie  power  to  confiscate  this  road.  I  grant  that  you  have  the  power  to 
kill  this  road.  Bat  what  I  say  is,  that  if  you  do  pass  this  bill,  if  the 
people  indorse  your  action  and  make  it  a  part  of  the  Constitution,  you 
do  kill  this  road;  and  I  ask,  is  it  right  to  do  it?  Is  it  right  to  rain  it, 
even?  Is  it  right  to  pass  any  bill  which  will  have  a  tendency  to-  cripple 
or  kill  any  interest,  particularly  an  interest  like  this  little  road,  ^yhich 
has  no  enemies,  against  which  no  complaints  have  been  made,  which  is 
neither  an  object  of  envy  nor  an  object  of  hate  ta  anybody  within  the 
State  of  California?  Is  that  doing  what  will  advance  the  interests  of 
the  people?  Is  that  in  accordance  with  the  oath  that  every  maa  took 
as  a  member  of  the  Legislature,  to  support  the  Constitution,  which 
guarantees  equality  to  all?  If  so,  where  are  the  facts?  Where  is  the 
evidence  which  authorizes  and  demands  that  such  be  done? 

Of  course,  we  are  informed  through  the  newspapers,  which  sometimes 
get  things  right,  we  are  informed  through  the  medium  of  Mr.  Leeds, 
who  I  understand  to  be  the  real  author  of  this  bill,  that  they  are  not 
seeking  to  make  war  upon  the  little  roads;  that  they  are  only  anxious 
to  grapple  the  large  road;  to  throttle  the  monster,  as  they  call  it,  and 
to  seize  hold  of  the  Southern  Pacific  Company,  and,  metaphorically 
speaking,  to  choke  it,  and  compel  it  to  submit  to  wholesome  legislation. 
Inasmuch  as  the  author  of  this  bill,  inasmuch  as  the  friends  of  this  bill, 
inasmuch  as  the  newspapers  that  favor  this  legislation,  inasmuch  as  all 
the  people  who  seem  to  favor  this  legislation,  are  united  in  one  voice,  and 
say  that  they  don't  wish  to  injure  any  little  road,  we  are  here  rejire- 
senting  a  little  road,  and  ask  you  to  protect  us.  We  ask,  if  you  feel 
compelled,  either  by  your  own  feelings  or  the  quality  of  the  evidence 
that  may  be  brought  before  you,  if  you  feel  that  it  is  due  to  the  public 
opinion,  if  you  feel  that  there  has  been  built  up  in  this  State  a  suf- 
ficient anti-railroad  feeling  to  justify  you  in  voting  for  such  an  amend- 
ment as  this,  if  you  feel  that  you  can  go  home  and  justify  it  to  your 
Cionstituents,  if  you  feel  that  it  is  the  opinion  of  the  people  of  the  State 


—  97  — 

of  California,  that  are  always  right,  although  they  may  at  times  make 
mistakes,  if  you  feel  that  the  people  will  sustain  you,  then  I  ask  you,  in 
the  name  of  every  man  wlio  says  he  favors  this,  to  protect  the  little  road, 
and  get  the  big  road  that  you  want  to  hurt.  Protect  us.  The  little  road 
cannot  protect  itself  against  competition.  The  little  road  cannot  pro- 
tect itself  against  the  big  road. 

If  you  are  going  to  make  class  distinctions,  if  you  are  going  to  make 
arbitrary  distinctions,  make  them  in  such  a  manner  that  all  the  little 
roads  will  be  safe  from  injury;  and  unless  you  can  do  that,  we  say  it  is 
not  right  to  pass  a  law  which  will  have  a  tendency  to  injure  them.  The 
strong  can  take  care  of  themselves.  The  weak  need  protection  from 
the  Legislature.  It  is  good  to  have  a  giant's  power.  It  is  wicked  to 
use  that  power  like  a  giant.  You  gentlemen  have  a  giant's  power.  You 
can  kill  these  little  roads.  We  ask  you  not  to  do  it.  We  ask  you  to 
study  this  matter  carefully  before  you  pass  any  measure  which  will 
have  the  tendency  named,  which  will  simply  result  in  killing  these  little 
roads. 

We  ask  you,  before  you  make  any  such  radical  changes  in  the  Con- 
stitution of  this  State,  which  change  is  so  great  that  the  very  mention 
of  it  makes  people  shudder,  we  ask,  before  you  revolutionize  the  Con- 
stitution of  this  State  and  reform  the  laws  pertaining  to  railroad  legis- 
lation, we  ask  you  to  be  careful  and  eliminate  from  it  everything  that 
will  injure  the  weak,  and  if  you  desire  to  strike  at  the  corporation  that 
is  deemed  powerful,  strike  directly  at  it.  You  have  the  power.  If  you 
have  the  power  to  pass  this,  you  have  the  power  to  pass  a  resolution 
directed  solely  at  the  Southern  Pacific  Company.  And  I  say,  why  not 
meet  the  question  fairly?  Why  seek  beliind  a  general  law  and  a  general 
purpose  to  cover  the  real  design?  Assail  the  Southern  Pacific  Company. 
It  will  welcome  you.  Assail  it  in  any  way  you  choose,  but  leave  the 
little  roads  alone.  If  the  Constitution  of  the  United  States  will  permit 
the  passage  of  a  constitutional  amendment  in  the  State  of  California, 
such  as  is  here  proposed,  it  will  permit  the  passage  of  a  constitutional 
amendment  to  strike  directly  at  one  road  and  leave  all  others  alone. 
Of  course,  that  would  be  class  legislation.  Of  course,  they  w^on't  ask 
you  to  do  that.  Why?  "Because,"  they  would  say,  "the  people  won't 
stand  that.  The  people  would  say  that  you  are  actuated  by  the  desire 
to  crush  one  particular  company."  But  the  result  of  this  legislation,  if 
you  pass  this  bill,  is  exactly  the  same  as  if  you  assail  the  Southern 
Pacific  Company  alone. 

Now,  I  haven't  a  word  to  say  against  Mr.  Leeds.  He  has  devoted  a 
good  deal  of  time  to  this  matter.  I  wish  he  were  here  to-night,  that  he 
might  ask  me  a  few  questions,  and  I  might  have  the  privilege  of  asking 
him  one  or  two  questions  on  this  matter.  I  grant  he  has  given  many 
years  of  study  to  this  tariff  question,  and  I  grant  his  honesty  of  purpose. 
I  believe  him  when  he  says  he  is  working  for  the  benefit  of  his  employers. 
I  grant  he  can  present  their  views  to  this  committee  with  ability  second 
to  none.  I  grant  he  is  doing  the  best  he  can.  But  I  seriously  object  to 
the  conclusion  he  draws.  I  most  seriously  object  to  his  proofs,  and  I  do 
deny  the  logical  deduction  he  seeks  to  draw  therefrom.  Now,  it  is 
admitted,  gentlemen,  that  this  new  Constitution,  that  this  amendment 
to  the  Constitution — it  is  admitted  that  it  is  an  anomaly — that  it  is  an 
innovation.  If  this  bill  is  correctly  represented,  it  is  an  innovation 
upon  the  Constitution  of  the  State,  Leaving  out  of  the  question  whether 
7 


—  98  — 

there  is  anv  ^^veat  public  clamor  in  favor  of  this  particular  amendmerit 
to  the  Constftution,  let  us  for  a  moment  ask  ourselves  a  question  Is 
it  di<^nilied  to  put  a  mass  of  figures  like  that  m  the  Constitution  of  this 
State?  Is  it  statesmanlike  to  do  so?  Is  it  in  accordance  with  the  inten- 
tion of  the  framers  of  this  Constitution?  I  believe  you  know,  and  I 
believe  every  one  in  the  State  believes  it  is  not.  Was  he  following  out 
the  designs  of  the  public,  the  wishes  of  every  community  or  not?  It 
Bliuuld  contain  direct  statements,  plain  propositions  and  figures.  Figures 
arc  exceedingly  proper  in  reports,  but  out  of  place  in  the  Constitution. 
A  Constitution  should  contain  something  that  everybody  can  under- 
stand—lawyers and  laymen— whether  he  is  a  railroad  expert  or  a  mere 
citizen,  paying  for  his  travel  on  the  railroad  and  paying  for  the  trans- 
portation of  his  freight. 

But  if  we  grant  for  the  sake  of  argument  that  it  is  a  good  plan  to  put 
a  mass  of  figures  in  the  Constitution— if  we  grant  for  the  sake  of  argu- 
ment that  a  mass  of  figures  such  as  here  contained  in  three  pages  of  this 
bill,  that  we  shall  put  that  in  the  Constitution— whether  it  is  plain,  or 
Avhether  it  should  be  made  plain;  if  figures  are  to  be  placed  in  the  Con- 
stitution, they  should  be  there  so  that  the  common  people  can  understand 
them.  I  have  as  great  regard  for  t"i:e  people  as  you  have  and  we  all 
have.  I  think  everybody  should  be  able  to  understand  the  Constitution 
which  governs  him^  and  if  you  are  going  to  have  figures  in  the  Consti- 
tution, let  them,  as  I  said  before,  be  such  that  everybody  can  understand 
them. 

What  man  can  memorize  such  a  mass  of  figures  as  that  classification? 
What  man,  whether  familiar  with  figures  or  not,  can  memorize  that 
classification  and  tell  what  it  means?  The  putative  author  of  this  bill, 
the  Honorable  Senator  Gesford,  cannot  do  it.  The  real  author  of  this 
bill,  Mr.  J.  S.  Leeds,  cannot  do  it.  There  is  not  a  man  on  earth  that 
can  take  those  figures  and  memorize  them,  or  read  them  and  under- 
stand them.  Why?  ,  Because  they  are  not  complete — because  they  are 
not  complete.  Because  it  requires  an  outside  book  or  a  paper  to  explain 
them.  Because  it  requires  something  besides  the  figures.  For  it  so 
says  here,  in  section  three,  that  this  Distance  Tariff  shall  be  applicable 
to  all  freight  traffic  between  all  stations  in  the  State  of  California  now 
established,  or  that  may  be  hereafter  established: 

"  The  classification  of  property  provided  for  in  this  Distance  Tariff'  is 
based  on  the  Western  Classification,  and  rules  governing  the  same, 
adopted  and  issued  by  the  Western  Classification  Committee,  of  which 
J.  T.  Ripley  was  Chairman,  and  which  took  effect  January  1,  1893,  to 
which  said  classification  reference  is  hereby  made;  provided,  however, 
that  no  rule  or  rules  governing  said  Western  Classification,  providing 
for  any  change,  modifications,  or  additions  to  the  classifications  men- 
tioned in  this  California  Distance  Tariff,  shall  have  any  application 
hereto." 

Let  us  consider  now — laying  aside  the  question  whether  J.  T.  Ripley 
is  deserving  of  so  much  of  the  people  of  California,  that  he  should  be 
immortalized  by  having  his  name  inserted  in  the  Constitution  of  the 
State  of  California,  as  being  the  only  man  in  the  United  States  of 
America  that  deserves  having  his  name  printed  in  the  Constitution  that 
is  to  govern  us  for  any  and  all  time  to  come— leaving  that  out,  leaving 
that  out  of  the  question  as  to  whether  this  classification  committee  is 
composed  of  men  of  such  standing  and  abilitv  that  thev  are  to  be  immor- 


-  99  — 

taiized  in  the  State  of  California — leaving  out  of  view,  any  and  all 
questions  as  to  whether  figures  should  be  put  in  the  Constitution  or  not, 
you  will  see,  gentlemen,  from  the  reading  of  these  figures,  they  are 
meaningless.  They  are  like  unto  the  hieroglyphics  of  the  Pyramids  of 
Egypt  that  remained  for  centuries  unsolved,  until  they  discovered  the 
"  Rosetta  stone;"  they  remained  unknown  until  the  "  Rosetta  stone  "  was 
resurrected.  The  inscriptions  on  the  Pyramids  could  not  be  read  until 
the  resurrection  of  the  "  Rosetta  stone."  And  when  a  man  takes  the  Con- 
stitution of  the  State  of  California  and  tries  to  read  it,  he  says,  "  What 
does  it  mean?"  He  cannot  read  and  understand  the  figures,  but  he 
looks  at  it  and  tries  to  make  it  intelligible.  He  observes  the  name 
of  J.  T.  Ripley.  "  Who,"  he  says,  "  Who  is  this  J.  T.  Ripley?  I  don't 
know.  Where  did  he  come  from?  What  has  this  J.  T.  Ripley  done 
that  he  should  be  immortalized  in  this  Constitution,  without  any  ref- 
erence to  his  great  achievements?  How  did  he  acquire  this  preference?" 
But,  we  have  a  "  Rosetta  stone"  in  the  book  published  by  the  Western 
Classification  Committee,  with  which  to  read  our  Constitution.  Is  not 
that  a  terrible  state  of  affairs?  A  terrible  state  of  ali'airs  for  the  Con- 
stitution of  this  State. 

Now,  a  man  hereafter  elected  to  the  Legislature  of  California  appears 
in  the  Senate  Chamber,  and  there,  before  the  Superior  Judge  in  this 
country,  swears  that  he  will  support  the  Constitution  of  this  State — 
swears  that  he  will  support  the  Constitution  of  California,  and  the 
book  prepared  by  J.  T.  Ripley!  That  is  our  Constitution!  That  is 
your  Constitution,  and  you  are  asked  to  make  that  Constitution.  You 
are  asked  to  label  that  Constitution  as  being  a  proper  one  for  the  people 
of  this  State  to  live  under,  and  you  are  responsible  for  it.  If  anybody 
hereafter  finds  fault  with  this  Constitution,  it  will  be  you,  gentlemen, 
who  will  receive  all  the  blame.  Of  course  you  will  receive  all  the 
praise  if  this  proves  a  benefit  to  the  State,  but  can  you  afford  to  run 
such  a  chance?  Now,  is  that  right?  Is  that  good*  policy?  Is  that 
good  law?  Is  that  good  sense?  Is  it  American?  Is  it  constitutional? 
We  are  told  in  history  that  the  old  Sibyl  of  Rome  came  to  the  Emperor 
with  certain  books  to  sell;  there  were  nine  of  them;  she  demanded  a 
very  large  sum;  he  would  not  pay  it,  and  she  went  away.  Then  she 
came  back  with  only  six  books,  and  demanded  a  still  larger  sum,  but 
he  would  not  pay  it.  Then  she  went  off  and  returned  again  with  three 
books,  and  demanded  a  still  larger  sum,  which  he  refused  to  pay.  She 
went  away,  and  the  books  were  lost. 

Now,  suppose  this  book  were  lost — where  would  we  be?  They  say 
that  railroad  companies  are  wicked.  -They  say  that  the  railroad  would 
corrupt  members  of  the  Legislature.  They  say  that  gentlemen  who  are 
now  present  in  this  room  have  been  hanging  around  the  halls  of  Legis- 
latures for  the  past  twenty  years  for  the  purpose  of  corrupting  members 
of  the  Legislature,  and  they  say  that  they  have  succeeded  in  doing  it. 
They  say  that  the  railroad  companies  of  this  State,  particularly  the 
big  railroads,  maintain  people  for  the  express  purpose  of  corrupting 
members  of  the  Legislature.  Grant  it  all.  They  say  also  that  they 
have  corrupted  the  newspapers — that  they  have  even  soiled  the  judicial 
ermine  of  this  State — not  only  of  this  State,  but  of  the  United  States — 
and  that  they  have  even  invaded  the  precincts  of  the  gubernatorial 
home  and  the  presidential  hall,  and  corrupted  them  all.  Grant  it  that 
they  have  done  so;  and  if  it  be  true,  how  long  would  it  take  for  the 


—  lUO  — 

railroad  companies  to  steal  all  these  bookstand  burn  them  up,  and  then 
Avhere  would  we  be? 

If  the  book  issued  by  the  Western  Classification  Committee  were 
destroyed— if  every  book  issued  by  that  committee  were  burned  up 
(and  i  tell  you  it  is  an  easy  matter  to  do  so,  for  no  man  except  a  rail- 
road man  has  possession  of  those  books— no  man  save  a  railroad  man 
has  them)  the  railroad  companies  of  this  State,  and  this  nation  could 
destroy  in  twenty-four  hours  every  book  issued  by  the  Western  Classi- 
fication Committee. 

Have  any  of  you  gentlemen  ever  lived  in  the  State  of  Nevada  ?  If  so, 
you  know  there  existed  there  in  its  early  history  men  who  w^ere  known 
as  the  "  inside  "  prospectors;  they  would  come  into  Court  at  any  time  and 
swear  to  anv  lie  about  any  mine,  if  reasonably  paid  for  it.  They  relied 
upon  their  inemory.  So  if  we  are  to  become  a  profession  of  "  inside"  pros- 
pectors, it  will  be"far  ahead  of  those  of  the  Comstock  Lode,  who,  we  are 
told,  were  willing  to  swear  from  memory  to  the  lies  of  the  various  mining 
corporations.  Now,  if  you  grant  everything  that  is  said  against  the 
railroad  companies — for  if  they  do  what  they  say  they  have  done  in  the 
past,  what  they  say  they  are  trying  to  do  now— why,  there  is  no  limit 
to  their  wickedness,  and  these  books  would  be  gobbled  up  so  quick  that 
no  man  would  be  able  to  even  keep  a  leaf. 

Now,  has  there  been  any  evidence  produced  here  that  would  justify 
you  in  running  such  a  chance  as  that?  If  so,  where  and  when  and 
how?  If  thereis  any  testimony  here  of  experts;  of  any  common,  plain 
every-day  ordinary  citizen;  if  any  testimony  of  any  shipper  in  the  land, 
if  any  testimony  of  any  man  who  has  been  charged  extortionately  for 
rates  of  freight  or  fare;  if  any  testimony  presented  here  in  the  reports  of 
any  authorized  Commissions;  where  is  it?  Answer  where?  It  exists 
simply  in  the  brain  of  one  man.  Aad  yet,  you  are  asked  to  change  the 
Constitution  without  anything  to  base  the  change  upon.  We  say  that 
is  not  right.  We  say  that  is  not  a  mere  temporary  measure.  It  is  law 
— it  is  not  a  law  that  can  be  later  amended  or  repealed.  It  is  a  Consti- 
tution made  to  last  for  all  time;  not  to  be  changed  with  the  next  breath 
of  public  opinion.  We  know  that  political  parties  of  California  are 
nearly  equally  divided;  we  know  that  the  Legislature  of  one  session  is 
Democratic  and  the  next  Republican.  All  this  because  the  people 
change  their  politics.  We  read  of  a  certain  party  in  power  one  session, 
and  the  next  changed.  But  these  are  mere  temporary  changes  that  can 
be  made  without  injury  to  the  mass  of  the  people.  The  Constitution  is 
a  solemn  and  sacred  instrument;  the  Constitution  is  made  for  all  time, 
and  it  should  not  be  changed  except  upon  the  very  best  of  reasons;  and 
unless  the  man  who  votes  to  change  it  can  say,  I  gave  my  vote  because 
of  evidence  introduced  which  was  overwhelmingly  in  favor  of  the 
change. 

Now,  again;  are  these  figures  set  here  in  this  Constitution — these  five 
pages  of  figures— are  those  figures  as  low  as  they  should  be?  If  so, 
where  is  the  testimony  to  prove  it? 

Has  any  man  on  this  committee  heard  any  testimony  to  show  these 
figures  are  as  low  as  they  should  be?  Remember,  you  are  called  on  to 
legislate  for  the  people;  still,  they  tell  you  the  people  want  low  rates; 
are  these  rates  as  low  as  they  ought  to  be;  ought  they  not  to  be  reduced? 
If  so,  why  ?  Ought  they  not  to  be  raised  ?  Has  any  man  introduced  tes- 
timony to  show  these  rates  are  as  high  as  they  ought  to  be?     I  under- 


—  101  — 

stand  not;  but  I  understand,  on  the  other  hand,  there  have  been  a  dozen 
or  twenty  men  here  giving  evidence,  showing  from  facts  and  figures  that 
these  rates  are  not  high  enough;  wh}',  then,  should  you  adopt  these 
figures? 

Again,  if  we  admit,  for  the  sake  of  argument,  that  these  rates  are 
correct  for  the  present  time,  let  us  admit  for  the  sake  of  argument,  that 
if  these  rates  are  put  into  the  Constitution,  all  railroads  in  the  State  are 
compelled  to  charge  these  figures,  and  no  more;  let  us  admit  to-day  it 
is  the  proper  amount  to  charge.  Will  the  same  conditions  always  exist 
in  California?  If  not,  then  should  we  take  these  figures  as  a  basis;  will 
we  always  have  the  same  number  of  railroads,  too?  Will  there  not  be 
competition?  We  hope  so,  we  believe  so — almost  know  so;  then  should 
these  figures  be  fixed?     If  so,  why? 

Who  made  these  figures?  A  railroad  man.  Who  vouches  for  them? 
A  railroad  man.  Where  is  the  sworn  testimony  that  supports  them? 
They  are  based  arbitrarily;  they  are  made  witliout  reference  to  the  con- 
dition of  affairs  in  this  State;  they  are  made  by  the  Western  Classifica- 
tion Committee,  which  is  not  composed  of  the  railroads  of  this  State  as 
an  entirety;  the  railroads  of  this  State  form  but  a  very  small  portion 
of  that  AVestern  Classification  Committee,  and  have  ver}'  little  to  say  in 
fixing  those  rates. 

Where  is  the  sworn  testimony,  then,  which  proves  to  you  these  rates 
and  figures  are  what  they  should  be?  Who  vouches  for  their  being 
correct?  There  is  not  any  Court  in  this  land  that  would  mulct  a  man 
for  fifty  cents  without  testimony.  Shall  this  committee  strike  the 
millions  invested  in  railroads  in  this  State  without  some  sworn  testi- 
mony to  justify  the  action?  We  say  it  should  not  be.  Now,  we  say 
also,  that  this  legislation  is  absolutely  and  entirely  unnecessary.  I 
shall  not  take  up  the  time  of  the  committee,  as  it  is  growing  late,  and 
I  know  your  time  is  valuable.  I  shall  not  take  up  the  time  with  what 
W'C  know  to  be  correct.  We  don't  believe  there  is  any  public  clamor  in 
this  State  in  favor  of  this  particular  bill;  we  think  it  has  been  engi- 
neered by  one  person — by  one  association — and  they  have  built  up  a 
fire  and  flame.  What  is  its  real  intent?  What  is  its  real  strength? 
It  amounts  to  nothing.  It  is  not  the  feeling  of  the  people,  because  if  it 
were,  it  seems  to  me  there  would  be  more  complaints  presented  than 
there  are  at  present.  But  this  resolution,  we  say,  is  entirely  and  abso- 
lutely unnecessary. 

The  theory  of  the  Railroad  Commission  is  a  good  one.  It's  execution, 
let  us  admit,  is  poor  in  California.  Let  us  admit  for  the  sake  of  argu- 
ment that  it  is  poor  in  California.  It  would  be  almost  in  contempt  of 
Court  to  say  that  it's  execution  were  not  poor  in  California,  because  it 
has  been  decided  it  was  inefficient  in  California,  and  I  feel  the  respect 
due  the  Court,  therefore  we  will  admit  for  the  sake  of  argument  that 
its  execution  is  poor  in  California — admit  that  the  present  Commission 
has  not  done  right. 

Admit  everything  that  can  be  said  in  regard  to  it;  let  us  admit  it  in 
its  strictest  and  broadest  sense.  Let  us  take  the  pledges  made  in  the 
Assembly  in  favor  of  that  resolution  as  the  basis,  and  see  if  their  word 
was  true,  for  the  sake  of  argument.  What  of  it?  Whose  fault  is  it,  the 
railroads?  No,  it  is  the  fault  of  the  people;  it  is  the  fault  of  the  people 
who  elected  the  men  to  office.  It  is  the  fault  of  the  law.  Let  the  ])eople 
elect  better  men  to  office.     If  we  are  going  to  change  the  Constitution  at 


—  102  — 

•Ul  chancre  it  so  the  Commission  can  have  the  power  to  enforce  their 
decrees  "l  have  lived  in  California  for  twenty-seven  years,  and  have 
heard  members  of  Boards  of  Supervisors  denounced  as  strongly  as  this 
Commission  has  been  denounced.  I  have  heard  the  Legislature 
denounced;  I  have  heard— I  have  seen  members  of  the  Legislature 
l)urned  in  efligv;  having  served  in  both  branches,  I  can  say,  all  this  I 
i^aw,  and  part  of  this  I  was.  But  who  ever  heard  of  abolishing  the  whole 
Legislature  simplv  because  some  of  the  members  had  done  wrong?  It 
is  claimed  that  most  of  this  Commission  have  done  wrong,  and,  there- 
fore, you  must  change  entirelv  the  Constitution,  change  the  execution 
of  it. '  Wlierc  will  the  control  be  placed  if  you  abolish  this  Commission? 
Where  will  the  control  be  placed?  Part  in  the  Legislature,  part  in  the 
Constitution;  a  divided  body. 

I  will  submit  whether  it  is  a  good  plan  to  put  the  power  into  the  Leg- 
islature again.  I  served  in  the  Legislature  when  the  railroad  question 
was  before  the  Legislature.  I  served  in  the  Legislature  when  the  rail- 
n.ad  question  was  not  before  the  Legislature.  We  did  not  have  any 
friction;  we  devoted  our  time  to  work.  I  believe  in  keeping  this  mat- 
ter out  of  the  Legislature;  it  is  a  good  way  to  handle  it.  The  experi- 
ence in  other  States  demonstrates  tha*  Kailroad  Commissioners,  if  they 
are  men  who  will  do  their  duty,  is  the  best  way;  the  remedy  is  with  the 
people.  If  the  people  elect  good  men  to  the  Legislature,  they  are  all 
right;  if  they  elect  bad  men,  they  get  the  worst  of  it;  if  they  elect  bad 
Justices,  they  get  the  worst  of  it,  and  the  remedy  is  to  get  rid  of  them. 
If  it  is  sought  to  change  it — if  it  is  sought  to  change  the  Constitution 
in  reference  to  the  Railroad  Commissioners — give  them  more  power. 
You  say  you  want  to  change  the  Constitution.  I  say,  as  one  speaking 
his  humble  opinion,  I  say  it  is  not  necessary  to  change  the  Constitution 
to  do  that.  I  believe  the  Legislature  has  power  to  enforce  their  decrees; 
I  think  you  have  the  power  to  give  this  Railroad  Commission  ample, 
unlimited  power  to  say  to  the  railroads,  these  are  the  rates  for  freight 
and  fare;  we  have  prepared  them  for  you,  and  you  must  obey  them; 
and  give  that  Commission  power  to  enforce  their  decrees;  let  the  respon- 
sil)ility  rest  with  them;  change  the  Constitution  so  as  to  give  them  the 
power,  if  they  have  not  got  it  now;  but  in  the  name  of  common  sense, 
in  the  name  of  this  State,  in  the  name  of  equal  rights  to  all,  in  the 
name  of  that  safety,  which  is  voiced  by  the  Constitution  of  this  State, 
let  us  have  no  more  class  distinctions,  no  more  arbitrary  distinctions. 

Let  this  railroad  question,  if  it  is  to  be  tinkered  with  at  all,  be 
tinkered  with  by  giving  the  Commission  power.  The  reason  they  have 
not  done  their  duty  in  the  past,  they  say,  is  because  they  have  had  no 
power  to  enforce  their  decrees.  Give  them  the  power.  Admitting  as  I 
do,  although  I  deny  it  as  a  matter  of  fact,  the  proposition  that  the 
Railroad  Commission  in  the  past  has  not  done  its  duty,  for  the  sake  of 
argument,  then  I  say,  the  reason  given  by  themselves — and  it  is  a  good 
reason— is  that  they  did  not  have  the  power  to  enforce  their  decrees,  and 
if  it  is  necessary  to  amend  the  Constitution  in  order  to  make  up  for  the 
damage  done  to  the  State  by  reason  of  the  failure  of  the  members  of 
the  Railroad  Commission  to  do  their  duty,  amend  the  Constitution  so 
as  to  give  them  power  to  do  their  duty,  and  then  elect  good  men  as 
members  of  the  Railroad  Commission,  and  all  will  be  well.  Give  the 
little  roads  a  chance.  If  you  are  to  pass  this,  leave  them  out.  But  do 
not  pass  this  at  all;  do  not  put  such  an  anomaly  in  the  Constitution  of 


—  103  — 

this  State.  We  are  all  proud  of  our  State;  if  I  may  be  pardoned  in 
saying  a  word  in  favor  of  the  State  to  members  here,  some  born  in  the 
State  and  others  living  here  for  many  years;  and  in  the  course  of  travel 
this  year,  and  we  all  expect  to  attend  the  World's  Fair,  we  all  expect 
to  go  there  and  boast  of  the  State  of  California  as  all  true  Californians 
do — I  venture  the  assertion  that  even  the  respected  and  honored 
gentleman  who  represents  the  county  of  Napa  in  the  Senate  with  so 
much  ability,  and  whom  I  have  known  and  honored  so  many  years — I 
venture  the  assertion,  if  Senator  Gesford,  the  putative  author  of  this 
bill,  was  in  Chicago  visiting  the  World's  Fair,  and  this  should  become 
a  part  of  the  Constitution,  and  he  was  asked  "Who  put  this  mass  of 
figures  in  the  Constitution?"  he  would  say:  "I  do  not  know,  really  I 
have  forgotten."  He  would  not  be  proud  of  his  own  work,  because  it 
would  be  such  an  anomaly,  this  Constitution;  and  the  results  are  not 
too  far-fetched,  for  it  would  ruin  every  little  road  that  has  come  up 
here  and  given  your  committee  facts  and  figures  to  show  that  it  would 
be  dangerous. 

The  Southern  Pacific  Company,  I  speak  not  for.  I  have  no  affilia- 
tion with  them,  except  that  of  friendship  to  some  of  the  men  connected 
with  it.  I  represent  it  in  no  wa}^  shape,  form,  or  manner.  I  know  not 
its  views  on  this  matter,  and  care  not  for  them.  I  speak  here  as  the 
representative  of  the  little  roads,  as  a  citizen  and  taxpayer  of  California, 
and  say  that  if  such  a  measure  is  ever  passed  (and  voicing  the  senti- 
ments of  the  gentlemen  before  me),  it  would  turn  back  the  wheels  of 
progress  in  this  State  for  twenty  years.  We  are  all  looking  forward  to 
the  time  when  the  headlight  of  the  competing  railroad  shall  be  seen 
flashing  its  rays  upon  the  hills  and  valleys  of  this  State,  carrying  the 
music  of  the  competing  railroad  into  the  ear  of  every  shipper  of  the 
State,  reducing  the  rate  of  fares  and  freights,  not  by  the  Constitution  or 
by  oppression  of  law,  but  by  the  higher,  broader,  stronger,  grander,  and 
more  impressive  law  of  competition;  and  unless  you  allow  the  railroad 
people  to  manage  their  business  in  a  reasonable  way,  unless  you  invite 
capital  here,  and  unless  you  refrain  from  putting  iron  bands  upon  capi- 
tal, as  this  would  be,  the  day  is  very  far  distant  when  a  competitive 
railroad  will  enter  California.  If  things  are  left  as  they  are;  if  the  peo- 
ple are  permitted  to  go  on  in  their  own  way,  I  venture  the  prophesy, 
Mr.  Chairman,  that  at  the  next  session  of  the  Legislature,  when  you 
return  here  to  resume  your  seats,  you  will  be  met  at  the  entrance  to  the 
depot  at  Sacramento  with  the  headlight  of  a  competing  railroad  in  this 
State,  and  that  will  solve  the  question  of  fares  and  freights  in  California. 

Gentlemen,  I  thank  you  for  your  attention. 


Sacramento,  February  1,  1893 — 8:30  p.  m. 

Mr.  Earl:  At  the  adjournment  of  Constitutional  Amendment  Com- 
mittee last  evening,  we  had  arrived  in  order  of  the  programme  at  the 
Eel  River  and  Eureka  River  Railroad.  Mr.  Dolbere — is  he  here  to 
present  any  matters  in  that  regard? 


—  104  — 
Mk.  S.  M.  Buck 

Appeared  in  behalf  of  the  Eel  River  and  Eureka  Railroad  Company, 

and  spoke  as  follows:  rs    ^    r.  in    c  j--l, 

Mr  Chairman  and  Gentlemen  of  the  Committee:  On  behalt  ot  the 
Eel  liiver  and  Eureka  Railroad,  I  desire  to  call  your  attention  to  a  few 
facts  in  regard  to  the  condition  of  that  country,  and  also  ot  the  con- 
dition of  the  road,  that  you  may  the  better  understand  how  we  are 
situated  up  there.  I  have  listened  to  many  of  the  reports  in  regard  to 
the  short  roads,  and  I  find  that  there  is  a  similar  condition  existing  in 
regard  to  all  of  them  througliout  the  State.  However,  we  are  somewhat 
peculiarly  situated  up  there.  Of  course,  Humboldt  County  is  a  large 
county— conmiences  about  the  40th  parallel  of  latitude,  lying  on  the 
shore  of  the  Pacific  Ocean,  running  about  100  miles,  and  is  about  fifty 
miles  on  an  average  wide,  making  a  very  large  territory:  and  it  is 
peculiarly  situated  in  this,  that  it  is  surrounded  by  a  very  mountainous, 
hilly  country,  and  its  only  outlet  for  the  purpose  of  transportation, 
either  of  passengers  or  freight,  is  by  way  of  Humboldt  Bay  and  the 
Pacific  Ocean,  and  has  been  for  years.  Now,  under  these  circum- 
stances, and  considering  the  fact  tha*  navigation  has  been  considered 
rather  hazardous  across  the  bar — Humboldt  Bar,  as  it  is  called — the 
county  has  had  a  very  slow  development. 

It  lias,  we  claim,  great  natural  resources.  It  has  boundless  forests  of 
very  fine  timber,  and  fine  grazing  land,  and  really  is  a  country  that 
ought  to  have  invited  some  railroad  to  penetrate  there  long  ere  this; 
but  it  never  has.  And  the  business  of  the  county  has  developed  very 
slowly,  yet  still  steadily.  It  never  has  gone  back.  But  the  necessities, 
the  absolute  necessities  of  the  business  of  the  county,  demand  the 
building  of  railroads.  Of  course,  business  men  there  after  they  had 
attained  considerable  wealth  and  standing  in  the  community,  found 
that  they  could  not  compete  in  their  business  with  other  portions  of 
the  State,  except  that  they  made  use  of  this  modern  means  of  transpor- 
tation. Now,  then,  about  ten  years  ago  several  of  the  citizens  of  Eureka, 
which  is  the  county  town  of  Humboldt  County,  and  contains  a  popu- 
lation of  perhaps  eight  or  ten  thousand  inhabitants,  conceived  the  idea 
that  they  would  build  a  railroad  to  Eel  River  Valley,  about  twenty-five 
miles  long.  Now,  this  railroad  would  point  to  Ukiah,  where  it  would 
naturally  connect  Avith  the  San  Francisco  and  North  Pacific  Railway. 
To  them,  at  that  time,  it  seemed  to  be  an  enormous  undertaking.  Of 
course  they  were  men  who  had  had  no  experience  in  railroad  building, 
and  they  subscribed  a  sufficient  capital  stock  and  paid  in  sufiicient  to 
start  the  road,  and  in  the  course  of  a  couple  of  years  they  even  com- 
pleted it,  and  after  having  completed  it,  of  course  they  found  that  it 
had  cost  them  about  several  hundred  thousands  of  dollars  to  build  that 
road.  The  most  of  the  capital  that  built  that  road  was  borrowed  cap- 
ital, so  that  now  the  financial  condition  of  the  road  may  be  terselv 
stated  to  be  about  this:  The  bonded  indebtedness  of  the  road  is 
$488,000,  represented  by  four  hundred  and  eighty-eight  bonds  of  $1,000 
each,  bearing  interest  at  six  per  cent  per  annum,  pavable  semi-annually. 
Now,  when  they  built  this  road,  of  course  they  had  no  idea  that  they 
were  building  it  for  profit.  They  believed  that  their  money  would  be 
lost  for  many  years,  and  it  has  proved  so;  that  is  to  say,  the  original 
stock  has  never  paid  any  dividends,  except  a  small  dividend,  I  think; 


—  105  — 

this  year  our  dividends  started  in.  It  has  kept  up  the  repairs  of  the 
road,  and  made  such  small  necessary  betterments  as  had  to  be  made; 
a,nd  it  is  comj^leted  and  paid  for,  and  some  day  the  enterprising  citizens 
who  built  it  have  hoped  to  secure  from  it,  that  is,  from  their  original 
investment,  and  for  the  time  and  energy  expended  in  its  construction, 
fiome  recompense.  However,  the  people  along  the  route  that  reaches 
Eel  River  Valley  have  reaped  an  enormous  benefit.  Of  course  they 
risked  nothing;  they  gave  nothing  to  the  road.  Here  was  a  road  built 
to  their  doors  b}^  the  enterprising  citizens,  and  they  found  that  they 
•could  send  their  property  to  market — they  could  go  themselves  to 
Eureka  for  one  half  what  they  had  been  accustomed  to  expend  for  that 
same  purpose.  They  found  that  the  value  of  their  property  had  nearly 
•doubled  by  reason  of  the  building  of  this  road,  and  they  realized  that 
they  had  been  benefited  in  a  great  many  ways.  Besides,  it  created  a 
great  deal  of  business  that  otherwise  would  not  have  been  done. 

Now,  much  of  the  freight  over  this  road  is  lumber,  and  of  course 
while  the  earnings  of  the  road  have  been  considerable,  considering  its 
length  and  its  cost,  the  earnings  have  principally  consisted  of  the  trans- 
portation of  lumber,  which  has  been  transported  under  special  contract, 
and  not  upon  any  regular  rates.  Of  course,  they  have  a  schedule  of 
rates  for  ordinar}'  freight,  such  as  produce,  grain,  potatoes,  and  freight 
of  that  description,  but  all  of  the  lumber  that  comes  from  these  large 
mills  is  carried  upon  contract.  And  they  now  have,  as  I  learn,  con- 
tracts with  the  two  principal  mills  that  they  carry  lumber  for,  to  carry 
for  so  much  a  thousand  under  these  contracts,  which  extend  over  a 
number  of  years. 

Now,  this  railroad  is  earning — but  I  will  first  call  your  attention  to 
the  rates.  The  rate  for  lumber  is  from  $1  per  thousand  up  to  •$2, 
according  to  the  difficulty  of  getting  it.  The  rate  for  passengers  is  5 
cents  a  mile.  The  other  freight  rates  I  do  not  know,  the  schedule  rates, 
but  they  are  about  in  the  same  proportion  to  these.  The  road  is  doing 
very  well;  that  is,  it  is  doing  a  large  amount  of  business.  It  is  well 
built,  Avell  stocked  with  rolling  stock,  sufficient  to  accommodate  all  the 
traffic  offered.  Now,  the  gross  receipts  per  mile  per  annum  is  about 
^5,000.  Of  course  that  would  bring  it  within  the  prohibition  of  the 
^4,000  restriction,  as  I  understand  it,  of  this  constitutional  amend- 
ment. 

Now,  coming  back,  may  it  please  the  committee,  to  our  overland 
connection;  that  is  what  we  need,  and  what  the  people  of  the  county 
have  been  longing  for  for  years — connection  with  the  railroad  s\'stem 
■of  the  State  and  the  United  States.  The  distance  or  gap  between  the 
end  of  the  road  already  built  (because  there  is  a  small  extension 
forming  a  junction  with  the  Eel  River  road,  up  Eel  River)  is  about  one 
hundred  and  fifty  miles.  To  build  that  we  will  say  in  round  numbers 
will  cost  about  four  million  dollars. 

In  order  to  build  that,  of  course  it  will  be  necessary  to  furnish  bonds 
to  the  extent  of  about  three  million  dollars.  Now  this  is  a  great 
necessity  for  our  people.  They  all  feel  it.  None  of  them  complain  of 
the  charges  upon  this  Eel  River  road — and  I  shall  call  your  attention 
in  a  few  moments  to  other  roads  of  the  county.  They  are  all  happy 
and  pleased;  they  have  been  greatly  benefited  by  it,  and  of  course  with 
a  short  road  built  by  their  own  neighbors  and  friends  there  is  no  need  to 
have  any  difficult}',  because  if  any  difierence  of  opinion  arises,  they  can 


—  106  — 

easily  consult  with  each  other.  But  this  connection  with  the  railroad 
system  of  the  State  has  been  longed  for  for  years  by  these  people;  and, 
as  I  said  before,  it  has  become  a  burning  necessity.  They  feel  they 
must  have  it.  Now  then,  they  naturally  feel  very  timid;  they  feel  very 
anxious  over  this  constitutional  amendment  introduced  m  the  Legisla- 
ture and  they  say  to  themselves,  if  such  a  thing  as  that  passes,  how 
would  it  be  possible  for  us  to  furnish  bonds?  It  must  necessarily 
destroy  the  confidence  in  railroad  securities,  especially  in  the  building 
of  new  roads.  In  other  words,  it  would  arrest  the  development  of  that 
county  for  years;  that  is,  we  feel  it  would;  we  fear  that  it  would,  and 
we  may  say  that  we  are  positive  that  anything  of  this  kind  would  do 
us  an  immense  amount  of  harm,  in  fact  utterly  ruin  us. 

Now  then,  may  it  please  the  committee,  take  a  general  view  of  it.  In 
Humboldt  County  we  have  about  one  hundred  miles  of  standard  gauge 
raih-oads— a  little  over— consisting  of  short  roads,  leading  from  the 
main  bay,  Humboldt  Bay,  out  into  the  main  valleys.  More  roads 
must  be  built. 

Any  legislation  tending  to  cripple  railroads  built  would  injure  the 
people  there  vastly.  Now,  it  has  become,  may  it  please  the  committee, 
in  these  days,  an  absolute  necessity  to  have  railroads;  in  other  words, 
our  civilization  depends  upon  railroaas.  The  railroad,  the  telegraph, 
the  telephone,  and  electric  lights,  have  all  come  to  stay.  There  is 
no  such  thing  as  going  backward — we  must  constantly  go  ahead. 
The  whole  ambition,  the  whole  feeling  of  the  people,  is  to  advance,  to 
go  forward;  and  any  person,  or  any  set  of  persons,  who  attempts  to  stem 
this  tide  of  prosperity,  must  necessarily  be  buried.  They  cannot  meet 
the  masses  that- are  pushing  forward,  and  if  they  undertake  to  stem  that 
tide,  they  are  bound  to  be  trampled  under  foot.  Now,  you  take  this 
very  proposition.  It  is  a  move  in  retrogression  of  the  progress  of  the 
people — it  is  an  attempt  to  put  a  block  under  the  wheels  of  progress. 
But  it  cannot  possibly  be.  Now,  I  feel,  may  it  please  your  committee, 
somewhat  diffident  in  addressing  you.  I  have  heard  several  addresses 
here,  and  this  ground  has  been  gone  over  so  thoroughly,  that  it  seems 
to  me,  if  I  undertake  to  elaborate  on  it,  I  will  only  touch  on  the  old 
ground  over  again,  and  it  must  become  somewhat  stale  to  you,  to  have 
this  thing  hammered  and  dinned  into  your  ears.  To  give  you 
some  idea  of  our  necessities  for  a  connection  with  the  railroad  system  of 
the  State,  I  will  say  that  we  have  about  thirty  thousand  inhabitants  in 
that  county,  and  they  are  entirely  isolated  from  the  world,  except  over 
this  ocean  route;  and  for  myself,  I  have  traveled  over  this,  back  and 
forth,  so  often,  that  I  feel  like  a  regular  old  shell-back  sailor. 

There  is  the  Eel  River  road,  25  miles;  the  Pacific  Lumber  Company 
road,  about  15  miles;  the  Areata  and  Mad  River  road,  about  15  miles; 
the  Fresh  Water  railroad,  about  15  miles;  Vance's  railroad,  about  15 
miles;  Macabe  &  Co.,  about  10  miles,  and  other  short  lines  aggregating 
about  140  miles  of  railroad  in  that  county.  They  are  all  short  roads, 
but  they  have  cost  a  great  deal  of  money,  and  there  has  been  no  money 
made  on  them  except  in  this  way:  many  of  them  have  been  built  by 
business  men,  who  found  that  they  were  a  necessity  in  order  to  do  busi- 
ness. That  is  to  say,  regarding  lumber  manufacturers— thev  had  to 
have  their  logs— they  found  it  necessary  to  run  these  railroads  into  the 
forests,  and  penetrate  into  the  different  valleys,  rivers,  and  creeks 
in  order  to  draw  the  logs  to  their  mills;  in  other  words,  they  became  a^ 
necessity  to  the  doing  of  business  in  the  county. 


—  107  — 

Of  course,  there  are  many  objections  to  this  proposed  constitu- 
tional amendment.  Not  only  will  it  destroy  and  retard  the  i^rogress 
of  railroad  building,  which  seems  to  me  is  a  great  necessity,  not  only 
to  our  people  there,  but  to  the  whole  State;  but  so  far  as  we  are  con- 
cerned, I  believe  that  we  really  need  it  more  than  any  other  portion  of 
the  State;  and  we  think  that  this  bill,  if  it  could  possibly  bwcome  a  law, 
would  injure  us  more  than  any  other  portion  of  the  State  in  propor- 
tion, because  there  is  hardly  any  part  of  the  State  but  that  has  some 
railroad  connection;  that  is  to  say,  they  don't  have  the  same  distance 
and  the  same  obstacles  to  overcome  in  order  to  reach  a  railroad  connec- 
tion with  the  system  of  the  country. 

Of  course,  I  can't  conceive,  may  it  please  the  committee,  that  one 
hundred  and  twenty  intelligent  gentlemen,  such  as  compose  this  Legis- 
lature, can  be  assembled  from  different  portions  of  the  State,  who  could 
seriously  consider  this  proposed  constitutional  amendment.  I  don't 
believe  it,  and  never  shall.  I  presume  that  all  the  time  and  trouble 
that  we  have  been  to  in  coming  here,  have  made  no  difference  as  to  the 
final  result  of  the  vote  upon  this  amendment;  but,  after  all,  since  the 
agitation  has  been  commenced,  I  hope,  and  I  believe,  and  pray  that  good 
may  come  of  it.  The  different  roads,  represented  by  ditferent  gentle- 
men, have  come  up  here  and  have  given  you  facts  and  figures,  and  made 
you  acquainted  with  the  reasons  why  agitation  of  this  kind  should  cease, 
so  that  you  can  not  only  present  it  to  your  fellow  members,  so  that  they 
can  all  intelligently  act  upon  it,  but  your  proceedings  being  public,  and 
being  published  and  spread  broadcast  over  the  land,  everybody  derives 
information  in  regard  to  it.  In  other  words,  it  is  an  educator  of  the 
people.  The  people  ought  to  be  educated  on  this  subject,  and  they 
ought  to  understand  that  all  persons  who  agitate  a  fight  against  the 
railroads  are  not  their  friends — in  other  words,  they  are  not  doing  that 
which  is  advancing  the  interests  of  the  people  of  this  State.  No  man 
who  fights  the  great  improvements  of  the  age  is  doing  his  fellow  men 
good.  Every  man  wdio  wants  to  benefit  the  people  of  this  State,  or  any 
other  State,  or  any  other  country  in  which  he  lives,  must  advocate  and 
must  throw  his  influence  in  the  direction  of  progress.  He  must  not 
resist  the  great  improvements,  the  great  educators,  the  building  up  of 
the  country.  The  rail-civilizers — they  bring  the  people  together;  they 
make  us  all  neighbors;  they  bring  the  peojDle  of  the  East  right  in  close 
neighborhood  with  the  people  of  the  West.  They  are  the  peace-makers 
of  the  world.  They  make  neighbors  of  men  separated  thousands  of 
miles  in  distance,  who  without  these  railroads  would  be  strangers; 
would  be  jealous  of  each  other;  would  hate  each  other;  they  bring  the 
people  together,  and  they  make  a  brotherhood;  they  make  a  nation  of 
brotherhood. 

Now,  suppose  this  should  pass — and  I  don't  wish  to  go  over  the  ground 
of  the  gentleman  who  addressed  you  last  evening,  Mr.  Johnson.  I  had 
some  ideas  which  he  expressed  much  more  aptly  than  I  could,  and  much 
more  forcibly,  but  I  would  like  to  make  one  or  two  suggestions.  Now, 
suppose  if  this  w^ere  possible  to  pass,  what  would  be  the  result  in  a  legal 
aspect?     I  quote  from  the  case  of  the  Chicago,  Milwaukee,  and  St.  Paul 

Railway  Company  against  the ,  134  U.  S.  459,  a  brief  synopsis, 

or  rather  a  brief  extract  from  the  decision  of  Mr.  Justice  Miller,  who 
speaks  of  legislation  of  this  character,  and  he  says  this — it  is  only  a  few 
lines: 


—  108  — 

"And  neither  the  Legislature,  nor  any  Commission  acting  under  the 
authority  of  the  Legislature,  can  establish  arbitrarily,  and  without 
retiard  to  justice  and  right,  a  tariff  of  rates  for  such  transportation, 
which  is  so  unreasonable  as  to  practically  destroy  the  value  of  property 
of  persons  engaged  in  the  carrying  of  business  on  the  one  hand,  nor  so 
exorbitant  and  extortionate  as  not  to  have  regard  for  the  rights  of  the 
public  for  the  use  of  such  transportation  on  the  other." 

In  other  words,  then,  suppose  this  were  to  pass.  It  is  an  entirely 
arbitrary  measure,  and  it  must  necessarily  be.  This  Legislature  can 
not  try  and  fix  tariffs  for  any  particular  road.  If  it  should  undertake 
to  do  anything  of  the  kind,  it  must  make  an  arbitrary  rule,  an  arbitrary 
regulation,  and  if  this  must  be  done,  what  would  be  the  result  to  all 
these  little  roads — they  would  be  virtually  confiscated  under  this  pro- 
posed amendment.  Of  course,  if  the  doctrine  enunciated  by  the  learned 
fc5Ui)reme  Court  decision  of  the  United  States  be  correct,  why,  these  lines 
must  resist;  in  other  words,  the  consequence  would  be  that  it  would 
open  up  a  Pandora's  box  of  litigation.  Now  the  vast  extent  to  which 
these  roads  would  be  thrown  into  litigation  of  course  wouldn't  benefit 
the  people.  It  would  be,  may  it  please  the  committee,  like  all  titles  to 
land  that  are  entirely  unsettled.  We  all  recollect  the  effect  of  the  old 
Spanish  grants  in  this  State,  and  until  these  titles  became  settled,  and 
until  the  people  could  feel  that  their  title  was  good,  that  they  were  the 
owners  of  the  soil  upon  which  they  settled,  they  couldn't  make  perma- 
nent improvements.  No  man  will  do  it.  He  hasn't  confidence  to  do 
anything  of  the  kind,  nor  will  people  build  railroads  if  you  check  the 
confidence  in  their  ability  to  control  the  property  after  they  get  it. 
Now  these  are  considerations  that  all  ought  to  be  looked  to.  They 
ought  to  have  their  weight. 

But,  may  it  please  the  committee,  without  going  over,  and  without 
going  into  detail  in  this  matter,  I  take  it  that  this  is  the  understanding 
of  the  committee,  that  no  Legislature  has  the  power — they  may  have 
the  legal  power,  but  they  have  not  the  power  to  do  impossible  things, 
and  I  undertake  to  say  if  this  thing  pass  it  would  simply  be  an  impos- 
sible thing,  and  what  I  mean  by  that  is  that  it  would  be  an  impossible 
thing  to  enforce  it.  No  Legislature,  nor  any  set  of  officers  ever  could 
enforce  it.  It  would  simply  stir  up  strife;  it  would  simply  raise  com- 
motion; it  would  simply  throw  open  a  Pandora's  box  of  litigation  all 
over  the  land;  progress  would  cease  for  a  season,  but  mark  you,  gentle- 
men of  the  committee,  progress  will  never  cease  for  anv  great  length  of 
time;  all  those  who  throw  themselves  in  the  way  of  the  wheels  of  prog- 
ress will  be  crushed  sooner  or  later;  they  cannot  stop  it;  you  nor  I  nor 
any  one  else  can  control  this  question.  It  is  to  be  for  advancement; 
it  IS  going  ahead;  no  Jack  Cade  can  control  it,  and  there  are  many  of 
them  m  the  land  who  say  to  the  people,  if  you  will  give  me  the  power, 
I  will  do  this  and  I  will  do  that,  but  no  more  than  the  Jack  Cade  of  old 
can  you,  by  legislation,  do  this  thing  at  all.  Of  course,  true,  the 
only  way  that  you  can  do  this  is  by  a  Court  something  like  the  Com- 
mission; may  be  that  the  Commission  has  been  a  failure  so  far;  I  think 
myself  to  a  great  extent  it  has;  in  other  words,  mv  idea  of  a  Railroad 
Commissioner  would  be  a  most  intelligent  man,  and'one  who  was  willing 
to  devote  his  whole  time  and  attention  to  the  great  object  of  investi- 
gating the  condition  of  the  different  railroads  of  the  State— investigating 
their  relations  to  the  people,  investigating  their  rates  of  freights  and 


—  109  — 

fares,  and  if  they  found  any  injustice  and  they  did  not  have  the  power 
to  correct  it,  report  it  to  the  Legishxture  and  obtain  the  power. 

Now,  we  have  never  had  a  Railroad  Commission  that  lias  done  that 
thing,  although  I  believe  that  the  Railroad  Commission  has  been  a  very 
great  benefit  to  the  State;  the  very  little  that  they  have  done  has  bene- 
fited the  people,  and  all  the  time  this  thing  is  being  discussed,  all  the  time 
this  Railroad  Commission  is  being  arraigned  before  the  people  because 
they  did  not  devote  their  time  and  attention  to  the  duties  which  are 
imposed  on  them  by  the  Constitution.  I  say  that  the  Commission  itself 
and  the  people  are  being  educated  up  to  it,  and  the  Commission  will 
become  what  it  was  meant  to  be  and  what  it  ought  to  be.  There  is  no 
other  way.  It  is  impossible  for  the  Legislature  to  deal  with  this  thing;  it 
is  impossible,  I  say,  because  I  believe  you  are  all  intelligent,  honorable 
gentlemen.  I  say  it  is  impossible  for  them  to  pass  this  thing;  it  is 
impossible  for  them  to  seriously  consider  it,  in  my  judgment.  I  under- 
stand from  some  of  the  members  of  the  other  branch  of  the  Legisla- 
ture that  there  has  been  a  report  something  like  this:  that  it  has  been 
reported  back  without  recommendation;  but  I  am  satisfied,  from  con- 
versation I  have  had  with  difterent  members  of  that  branch  of  the 
Legislature,  that  many  men  who  came  here  prejudiced  in  favor  of  some 
measure  of  that  kind,  upon  consideration,  when  their  thoughts  had  been 
directed  to  it,  they  have  entirely  changed  their  impression  as  to  the 
feasibility  of  anything  of  this  kind,  and  necessarily  they  must. 

Now,  I  don't  feel  like  elaborating  upon  this  thing,  because  I  feel,  as  I 
said  before,  I  should  simply  be  going  over  the  ground  that  has  been  so 
ably  gone  over  by  others,  and  I  think  I  have  given  you  something  like 
a  general  idea,  and  I  hold  in  my  hand  here  a  type-written  report  in 
regard  to  the  road,  which  I  will  file  with  your  committee,  which  gives 
a  little  more  succinct  statement  and  perhaps  a  little  more  in  detail  than 
what  I  have  given  you;  but  I  think  I  have  given  you  a  general  idea  of 
our  situation  up  there;  of  our  needs  and  necessities,  and  we  hope,  and 
believe,  in  fact  I  have  no  doubt  in  my  own  mind  as  to  the  result  of  your 
investigation  of  this  matter  that  you  will  recommend  that  it  is  imprac- 
ticable and  tell  your  fellow  Senators  so;  and  I  know  that  your  report, 
which  you  can  easily  make  up  from  all  these  reports  which  have  been 
handed  in  to  you,  when  it  goes  forth  to  the  people,  I  am  satisfied,  will 
convince  the  people  that  they  have  been  ably  and  well  represented,  and 
on  further  consideration  that  your  report  and  your  action  is  correct. 
Of  course  I  can  understand  this,  that  there  is  always  some  question 
between  the  railroads  and  the  people;  there  necessarily  must  be;  the 
railroads  are  managed  by  people  who  desire  to  make  money;  it  is  very 
natural,  and  sometimes,  perhaps  through  thoughtlessness,  perhaps 
through  inadvertence  or  ignorantly,  they  do  that  which  may  wrong 
somebody,  and  the  person  who  is  wronged  becomes  antagonistic  to  the 
railroad  at  once.  True,  it  may  be  that  wrongs  have  been  committed, 
but  there  is  no  business  in  the  world,  may  it  please  the  committee,  that' 
has  been  conducted  where  there  is  not  more  or  less  friction  and  more 
or  less  wrong  committed,  and  we  cannot  expect  railroads  shall  be  an 
exception.  We  cannot  expect  that  they  shall  always  be  controlled  by 
men  of  intuition  or  men  of  godlike  qualities;  so  that  they  may  always 
do  exactly  the  right  think  at  the  right  time;  and  these  things,  it  seems 
to  me,  ought  to  be  disseminated  among  the  people  at  large,  and  I  know 


—  no  — 

of  no  place  T^•here  matters  of  that  kind  can  be  presented  and  spread 
throughout  the  land  better  than  from  this  Senate. 

Now,  gentlemen,  I  will  not  detain  you  longer,  so  far  as  I  am  con- 
cerned, and  I  thank  you.  .  ^  jo 

Burke:  When  was  your  road  completed.'' 

Buck:  In  1S85.  ,       -,   -,  .    i  i  .  j  j.  *i, 

Burke:  What  is  the  amount  of  the  bonded  indebtedness  at  the  com- 
pletion of  the  road? 

Buck:  Something  like  over  $500,000.  They  have  paid  ofl  some  por- 
tion of  it.  .  re  O 

Burke:  How  much  are  you  paying  off  per  annumj' 

Buck-  There  is  no  special  amount  to  be  paid  off;  the  bonds  have 
some  fourteen  or  fifteen  years  to  run,  and  they  can  only  be  paid  off 
to  such  as  are  willing  to  take  their  pay. 

Burke:  Do  you  make  any  provision  from  your  gross  earnings  to 
meet  your  indebtedness?  . 

Buck:  This  is  the  first  year  that  the  law  required  a  sinking  tund 
to  be  commenced.  The  bonds  had  so  many  years  to  run,  and  after  that 
they  are  required  to  commence  a  sinking  fund  for  their  redemption  at 
their  maturity. 

Burke:  Your  gross  receipts,  as  I  understand  you,  amount  to  about 
$125,000  per  annum;  do  you  know  what  your  expenses  are, independent 
of  the  interest  on  your  bonds? 

Buck:  I  could  not  tell  you  that;  I  did  not  have  the  data  to  make  it 
up,  and  Mr.  Dolbere,  who  is  the  only  Director,  is  here.  We  are  try- 
ing to  make  this  up  as  well  as  we  can.  We  had  to  do  it  somewhat 
hurriedly.     I  can't  answer  that  exactly. 


Statement  of  Mr.  Johx  Dolbere. 
(Representing  the  Eel  River  and  Eureka  Railroad.) 

To  the  Chairman  and  Committee  on  Constitutional  Amendments: 

Gentlemen:  In  1882,  a  few  prominent  business  men  of  Eureka 
united  to  build  a  railroad  connecting  that  city  with  the  Eel  River  Val- 
ley. The  people  living  on  the  proposed  route  were  anxiously  waiting 
for  better  facilities  of  travel  and  transportation.  Under  those  circum- 
stances, the  Eel  River  and  Eureka  Railroad  was  pushed  to  completion 
by  its  projectors  at  a  cost  of  $700,000.  It  was  completed  and  in  run- 
ning order  some  time  in  1885.  Since  then  the  rates  paid  by  passengers 
and  shippers  for  transportation  has  been  thereby  reduced  at  least  50 
per  cent,  besides  the  great  advantage  of  speed  and  safety.  It  is  about 
twenty-five  miles  long,  and  is  a  standard  gauge  railroad,  fully  equipped 
with  rolling  stock  sufficient  to  handle  all  traffic  offered. 

The  funds  for  constructing  this  railroad  were  mostly  borrowed,  and 
the  present  bonded  indebtedness  of  the  railroad  is  $488,000,  represented 
by  four  hundred  and  eighty-eight  bonds  of  $1,000  each,  bearing  interest 
at  the  rate  of  6  per  cent  per  annum,  payable  semi-annually. 

The  building  of  the  Eel  River  and  Eureka  Railroad  was  not  under- 
taken by  its  projectors  with  the  expectation  of  making  money;  they 
hoped  for  some  remuneration  for  their  time  and  money  expended,  but 


—  Ill  — 

their  principal  inducement  in  building  the  railroad  vras  to  improve  the 
city  of  Eureka,  and  accommodate  the  inhabitants  of  the  rich  Eel  River 
Valley,  and  also  to  commence  a  railroad  pointing  in  the  direction  of 
Ukiah,  in  Mendocino  County,  where  it  would  connect  with  the  San 
Francisco  and  North  Pacific  Railroad,  and  thus  aflbrd  Humboldt 
County  railroad  facilities  which  would  unite  it  with  the  railroad  system 
of  the  State  and  United  States,  and  with  the  city  of  San  Francisco. 

This  railroad  now  extends  from  Eureka  a  distance  of  twenty-five 
miles  on  the  direct  line  towards  Ukiah.  The  Pacific  Lumber  Com- 
pany have  built  an  extension  of  about  fifteen  miles  further  up  the  main 
Eel  River.  This  leaves  a  hiatus  of  about  one  hundred  and  fifty  miles 
to  be  built  in  order  to  make  railroad  connection  with  the  San  Francisco 
and  North  Pacific  Railroad  at  Ukiah.  To  build  and  equip  this  exten- 
sion will  require,  in  round  numbers,  say  14.000.000.  From  what  I 
have  already  said,  it  must  be  apparent  that  this  extension  of  the  Eel 
River  and  Eureka  Railroad  to  Ukiah  is  a  burning  necessity  to  the  people 
of  Humboldt  County.  In  addition  to  this,  local  extensions  and 
branches  must  be  built  in  order  to  properly  accommodate  the  growing 
business  of  the  county  and  develop  its  vast  resources.  To  build  these 
necessary  railroads  it  is  absolutely  necessary  to  borrow  large  sums  of 
money,  and  this  upon  bonds  secured  by  mortgages  upon  the  roads  to  be 
built.  The  people  interested  are  fully  informed  upon  this  most  impor- 
tant, and  to  them  vital  subject.  They  feel,  and  we  all  feel,  that  any  leg- 
islation tending  to  cripple  the  short  local  roads  now  in  operation  in 
that  county,  must  of  necessity  have  a  tendency  to  impair  railroad 
securities,  and  render  it  very  difficult,  and  perhaps  impossible,  to  borrow 
money  on  them.  The  resolution  now  pending  before  the  Legislature  to 
amend  the  Constitution  of  this  State,  and  incorporate  therein  a  fixed 
schedule  of  rates  and  fares  and  freights  applicable  to  all  railroads  in 
the  State,  if  passed  and  adopted,  must  necessarily  cripple  all  short 
roads  in  the  State.  It  would  virtually  shut  the  county  of  Humboldt  in 
from  the  outside  world  for  many  years  to  come,  and  this,  upon  the  very 
eve  of  a  prospective  railroad  outlet. 

It  will  therefore  be  readily  seen  that  the  proposed  measure  would  not 
only  virtually  put  a  stop  to  the  investment  of  private  capital  in  build- 
ing railroads  in  this  State,  but  it  would  cripple  the  energies  of  the  peo- 
ple and  discourage  thousands  of  business  enterprises  dependent  in 
whole  or  in  part  upon  railroad  facilities. 

The  passenger  fare  on  the  Eel  River  and  Eureka  Railroad  is  5 
cents  per  mile.  Rates  for  freight  are  in  about  the  same  proportion. 
The  patrons  of  the  railroad  have  never  complained  of  this,  as  they 
appreciate  the  great  advantages  which  have  accrued  to  them  from  the 
building  of  this  railroad.  "While  they  have  not  invested  nor  risked  a 
dollar  in  aiding  the  enterprise,  they  have  seen  other  men,  citizens  of 
the  same  county,  jeopardize  their  money  and  devote  their  energy  to 
building  a  railroad  to  their  farms,  bringing  to  their  very  doors  a  market 
for  everything  they  can  produce,  and  doubling  in  value  everything  they 
possess. 

As  the  gross  earnings  of  this  road  amount  to  about  $5,000  per  mile 
per  annum,  it  would  fall  within  the  class  of  railroads  to  which  the 
schedule  of  rates  in  the  proposed  constitutional  amendment  would 
apply.  The  most  of  this  freight  is,  however,  on  lumber  and  shingles, 
which  are  handled  over  this  road  at  a  very  low  rate,  increasing  the  vol- 


—  112  — 

unie  in  a  groater  proportion  than  the  profits  of  the  road.  If  allowed  to- 
run  on  its  present  schedule,  it  would,  from  this  time  forward,  pay  the 
projectors  of  the  enterprise  some  interest  on  the  money  originally 
invested  by  them.  For  the  first  nine  years,  the  road  did  not  pay  the 
investors  a  single  dividend  for  their  time,  energy,  and  the  risk  required 
in  undertaking  and  carrying  through  the  enterprise.  Any  legislation 
that  would  at  this  time  deprive  them  of  all  chance  of  any  profits  tnat 
miglit  otherwise  accrue,  and  possibly  oblige  them  to  go  deeper  into 
their  pockets  for  the  means  of  paying  the  interest  upon  the  bonded 
indebtedness  of  their  railroad,  would  be  exceedingly  unjustand  oppress- 
ive. The  stockholders  of  this  railroad  believe  that  they  have  vested 
rights  in  this  property,  and  also  in  the  use  thereof,  that  are  just  as 
sacred  as  if  tlieir  money  had  been  invested  in  any  private  manufactur- 
ing enterprise. 

But  over  and  above  private  rights  of  property,  and  what  is  of  para- 
mount importance  to  the  great  northwest  of  California,  is  the  blighting 
effect  such  a  measure  would  have  upon  every  projected  railroad.  The  days 
of  munificent  subsidies  are  among  the  things  of  the  past.  Private 
enterprise  alone  can  now  be  depended  upon  to  construct  new  railroads, 
and  open  up  and  develop  the  vast  resources  and  riches  of  large  portions 
of  the  State  that  are  now  lying  untouched;  but  legislation  of  the  kind 
now  contemplated,  would  strike  a  deathblow  to  all  railroad  extension^ 
by  killing  the  railroads  that  have  been  built  wholly  by  private  enter- 
]>rise,  and  by  bringing  financial  ruin  upon  those  enterprising  and  pub- 
lic-spirited citizens  who  have  come  to  the  front  and  risked  their  money 
and  credit  in  building  and  constructing  railroads,  thereby  enhancing 
the  industries  of  different  portions  of  this  great  State. 

Respectfully  submitted. 


Mr.  William  Collier. 

(Representing  the   Los  Angeles  Terminal    Railway  Co.,  and  also  the 
Southern  California  Railway  Co.) 

Mr.  Chairman:  While  I  have  no  statistics  in  regard  to  the  Los  An- 
geles Terminal  Company,  I  can  only  say  for  them  that  they  operate 
something  over  forty  miles  of  road  in  Los  Angeles  County,  and  they 
desire  to  be  understood  as  objecting,  in  connection  with  other  compa- 
nies, to  this  proposed  legislation;  and  while  I  have  before  in  a  former 
meeting  made  some  suggestions  to  your  honorable  committee  in  regard 
to  the  results  of  this  legislation  in  former  States,  since  that  time  I  have 
been  able  to  procure  some  figures  in  regard  to  the  results,  which  I  think 
are  practical,  and  which  I  think  ought  to  be  taken  into  account  bv 
this  company.  I  have  pursued  ray  investigation  somewhat  further 
than  the  State  of  Iowa  that  I  mentioned  formerly,  and  I  find  that  in 
the  State  of  Wisconsin,  in  1874,  a  statute  was  enacted  fixing  a  maxi- 
mum of  rates  of  fares  and  freights.  I  find  also  in  Minnesota  in  1871  a 
statute  was  enacted  in  like  manner,  and  also  in  Iowa  in  1874.  If  there 
be  others  than  these.  I  have  failed  to  discover  them.  I  have  traced  this 
legislation  through  the  sessions  and  laws  of  these  several  States,  with 
the  result  which  I  will  give,  and  will  take  them  in  order. 


—  113  — 

I  have  prepared,  with  the  aid  of  the  assistant  in  the  State  Library,  a 
schedule  of  the  railroad  construction  in  those  States  prior  to  and  during 
the  existence  of  those  statutes,  as  follows: 

This,  as  I  believe  is  throwing  the  clearest  light  upon  the  result  of 
such  legislation  as  is  proposed  by  this  amendment: 

In  the  State  of  Minnesota  there  were  built  in  1869  two  hundred  and 
sixty-eight  miles  of  road.  In  1870,  two  hundred  and  seventy-seven 
miles.  In  1871,  five  hundred  and  forty  miles.  During  this  year  a  law 
was  passed  fixing  maximum  rates  of  freights  and  fares  in  that  State — 
Chapter  XXIV,  Laws  of  1871 — a  law  covering,  or  attempting  to  cover, 
practically  the  same  ground  as  that  proposed  by  this  amendment.  In 
1872  there  were  built  two  hundred  and  ninety-four  miles  of  road  in 
that  State.  In  1873,  forty-four  miles.  In  1874,  forty  miles.  They  got 
weary  then  and  repealed  the  law,  but  they  left,  however,  some  very 
stringent  features  of  the  statute.  In  1875  there  was  not  a  single  mile 
of  railroad  built  in  that  State.  That  year  they  wiped  out  the  thing 
almost  entirely,  and  passed  a  more  favorable  and  liberal  law  toward 
railroad  companies.  In  1876  there  were  thirty  miles  built,  in  1877 
one  hundred  and  seventy-four  miles,  and  in  1878  three  hundred  and 
forty-one  miles. 

In  the  State  of  Wisconsin  in  1873  there  were  four  hundred  and  eighty- 
two  miles  of  road  built.  In  1874,  one  hundred  and  eighty-six  miles. 
The  agitation  was  pending  then,  and  during  that  year  the  Potter  law 
was  passed  in  that  State,  fixing  the  maximum  of  fares  and  freights. 
In  1875,  the  next  year,  there  were  twenty  miles  built.  In  1876,  seventy 
miles.  That  year  they  repealed  the  Potter  law.  In  1877,  sixty-five 
miles — takes  a  little  while  to  get  over  the  disease,  you  will  observe — 
and  in  1878  one  hundred  and  nine  miles. 

In  the  State  of  Iowa,  in  1871,  there  were  built  four  hundred  and 
seventy-seven  miles  of  road.  In  1872,  four  hundred  and  eighty-six 
miles.  In  1873,  eighty-two  miles.  Now  you  will  observe,  gentlemen, 
that  the  conventions  of  the  anti-monopoly  element  were  being  held 
during  the  year  1873.  The  grangers  were  organizing  throughout  the 
State.  The  agitation  was  fermenting.  The  conventions  were  held  dur- 
ing the  summer  time — August  or  July.  The  election  Avas  held  in 
November.  The  Legislature  met  early  in  December,  or  late  in  Decem- 
ber, and  the  law  was  passed  in  March  of  1874,  so  that  pending  the 
decision  of  the  people  upon  this  question  there  was  a  falling  ofl  from 
four  hundred  and  eighty-six  miles  in  1872  to  eighty-two  miles  in  1873. 
In  1874,  in  March,  the  result  of  this  agitation  in  the  Legislature  took 
place,  and  what  was  known  as  the  Granger  law  was  passed.  That 
year,  1874,  there  were  thirty-seven  miles  of  road  built  in  the  State  of 
Iowa.  In  1875  there  were  eighty-five  miles.  In  1876  there  were  eighty- 
nine  miles.  In  1877  there  were  ninety-five  miles.  In  1878,  in  March,  the 
law  was  repealed,  and  there  were  in  the  year  one  hundred  and  thirty- 
two  miles  built  in  the  State,  and  in  1879  there  were  five  hundred  and 
thirteen  miles  built. 

It  seems  to  me,  gentlemen,  that  these  figures,  taken  from  Poor's 
Manual,  which  I  take  it  is  authority,  speak  very  loudly  to  us  in  this 
particular  matter.  It  seems  to  me  that  comment  is  almost  unneces- 
sary— and  yet  there  are  one  or  two  matters  I  desire  to  mention. 

I  don't  believe  agitation  ever  came  at  a  more  inopportune  time  than 
at  this.     We  have  not  reached  the  point  in  the  State  of  California  when 


—  114  — 

we  can  afford  to  discourage  investments  in  railroad  enterprises  in  this 
State.  We  are  all  hoping  for  great  things  as  a  result  of  the  magnificent 
appropriation  made  by  this  State  to  make  the  Cahfornia  exhibit  at 
Chica<'o  during  this  year  a  success.  We  expect  to  have  our  State  there 
mat^nfficently  represented,  and  to  attract  great  attention— hoping  to 
receive  great  results  from  that  exhibit,  in  the  increase  of  our  popula- 
tion, and  in  capital  to  invest  itself  within  our  border.  It  seems  to  me 
it  would  be  a  very  dangerous  move,  in  the  light  of  what  Ave  desire,  and 
what  we  expect  as  a  result  of  that  national  exhibit,  for  representatives 
of  the  State  of  California  to  appear  there  in  Chicago  with  a  law  or  a 
constitutional  amendment  such  as  is  proposed  here  in  one  hand,  and 
point  to  that  exhibit  with  the  other;  it  seems  to  me  that  if  it  were  pos- 
sible at  all,  that  one  would  entirely  neutralize  the  other. 

In  regard  to  the  Southern  California  lines  and  their  purposes,  I  have 
no  knowledge.  What  their  profits  may  be  I  am  unable  to  state.  I 
know  this,  however,  that  for  the  past  six  or  seven  years  they  have  been 
continuously  expending  money  south  of  the  Tehachapis,  until  they  have 
more  than  five  hundred  miles  of  road  in  that  section.  What  the  pur- 
poses of  the  Santa  Fe  system  are,  I  don't  know;  whether  they  propose 
to  extend  these  lines  from  Mojave  north,  I  am  unable  to  say. 
But  I  do  say  this,  that  if  it  be  their  desire — if  it  be  within  their 
ability  to  do  this — to  reach  the  bay  of  San  Francisco,  I  can  say,  for  I 
believe  it  to  be  true,  that  it  cannot  be  done.  The  funds  cannot  be  pro- 
cured to  carry  forward  this  enterprise  if  such  legislation  as  this  is 
placed  in  our  Constitution.  It  makes  no  difference  to  me  whether  it  was 
in  the  Constitution  or  in  the  State  statutes,  it  would  have  a  like  effect. 
I  do  not  know — it  is  not  for  us  to  say — the  matter  is  entirely  in  the 
discretion  of  you  gentlemen  and  your  associates,  what  is  required  and 
what  is  needed  in  this  State;  but  I  do  believe,  in  the  light  of  this  show- 
ing, in  the  face  of  the  figures  that  I  have  read  to  you,  and  the  expe- 
rience of  other  States,  we  ought  to  be  wiser  than  they.  We  ought  not  to 
allow  ourselves  to  fall  into  the  same  error,  and  cripple  the  progress  of 
our  State  by  the  same  means  that  it  has  been  done  in  other  States,  who 
have  repented  and  learned  a  lesson  after  some  four  or  five  years. 

These  remarks,  gentlemen,  are  all  I  desire  to  make,  and  I  thank  you 
very  kindly  for  your  attention. 


Wednesday  Evening,  February  1,  1893. 

Earl:  Mr.  Fulton,  do  you  wish  to  add  anything  to  what  you  have 
Baid? 

Mr.  Fulton:  I  don't  like  to  use  the  committee's  time.  I  presume 
you  are  tired  of  the  question;  but  I  have  waited  here  since  last  Friday 
evening,  supposing  that  Mr.  Leeds  would  be  in  Sacramento.  Our  inter- 
est is  such,  and  he  seems  to  be  the  gentleman  who  has  had  the  honor- 
able Senator  to  introduce  this  bill;  he  seems  to-be  our  only  accuser;  he 
seems  to  have  deluded  the  merchants  of  San  Francisco  into  the  belief 
that  they  are  abused  and  robbed  by  all  the  railroads  in  the  State,  or,  at 
any  rate,  a  bill  has  been  introduced  taking  in  all  the  railroads.  Mr. 
Leeds  I  see,  and  I  presume  we  may  believe,  savs  to-day  in  the  "Bulle- 
tin that  if  there  isn't  special  legislation  in  regard  to  the  smaller  roads 
that  they  will  be  taking  the  property  away  from  them  without  any  due 


—  115  — 

process  of  law;  that  it  is  necessary  to  discriminate  in  regard  to  the  rail- 
roads of  California.  He  sa3's  plainly  to  a  reporter  of  the  "Bulletin" 
that  it  is  necessary  to  discriminate  between  the  Southern  Pacific  Com- 
pany and  the  other  railways  of  California,  or  take  the  property  away 
from  them  without  due  process  of  law. 

Mr.  Leeds  made  assertions  here  in  regard  to  the  ties  of  the  road.  He 
made  assertions  in  regard  to  the  fuel  consumed  by  the  roads. 
He  made  comparisons  of  the  operating  expenses  of  California  roads, 
comparing  them  with  Eastern  roads,  that  are  absolutely  false,  either 
through  ignorance  or  misapprehension.  I  am  willing  at  any  time  to 
come  before  this  committee,  in  the  interest  of  our  people,  and  by  further 
testimony  prove  the  assertions  I  have  made,  or  meet  Mr.  Leeds  before 
this  committee;  but  if  Mr.  Leeds'  assertions  are  to  be  taken  for  one  bit 
of  strength  before  this  committee,  I  claim  the  right  for  people  that  don't 
owe  one  dollar — that  have  brought  their  money  into  this  State  for  its 
development,  and  to  add  to  the  taxable  jDropert}^  of  this  State — I  claim 
I  have  the  right  to  have  an  opportunity  to  question  Mr.  Leeds,  and  let 
him  prove  his  assertions  that  he  has  made,  or  to  permit  me  to  say  and 
to  prove  to  this  committee  that  he  has  falsely  asserted  things  in  regard 
to  ties,  fence  posts,  fuel,  and  many  matters  that  are  of  great  importance. 

After  he  made  his  assertions  in  regard  to  the  operating  expenses  of 
railroads,  and  your  committee  adjourned  to  Tuesday  evening,  I  went 
home,  and  had  a  table  made  of  some  of  the  purchases  that  it  had  been 
necessar}'  to  make  in  the  operation  of  our  railroad.  In  the  past  month 
or  six  weeks  we  have  bought  rails  in  the  State  of  Illinois.  When  we 
bought  them  they  were  -132  a  ton,  when  they  reached  us  they  were  -$52 
a  ton;  an  increase  of  60  per  cent  over  Illinois,  Iowa,  or  Kansas.  We 
have  bought  a  little  material  in  Kansas  and  had  it  loaded,  and  when 
it  arrived  to  us  for  the  Nevada-California-Oregon  Railway,  the  increase 
over  and  above  the  expense  for  the  Eastern  lines  was  53  per  cent. 

Wheels  and  axles  in  carloads,  at  Chicago,  f.  o,  b.  cars,  when 
they  come  to  us  have  an  increased  cost  over  and  above  the  Chi- 
cago price,  or  for  the  Eastern  roads,  of  86  per  cent.  This  is  spot  cash. 
There  is  no  thirty  days;  there  is  nothing.  It  is  spot  cash.  Take  iron. 
Iron  in  carloads  for  building  trucks  for  our  cars  comes  to  us  with  an 
advance  of  52  per  cent.  Brake-beams  I  have  bought  in  Detroit, 
Michigan — carloads — come  to  us  with  an  increase  of  33  per  cent.  Car 
seats  from  the  Kilburn  Car  Seat  Manufacturing  Company,  in  the  city 
of  Philadelphia,  come  to  us  with  an  increase  of  25  per  cent.  Waste  in 
St.  Louis  or  Boston  comes  to  us  with  an  increase  of  41.  per  cent.  The 
articles  enumerated  show  a  cost  over  and  above  what  would  naturally 
be  the  cost  to  the  Eastern  roads,  an  average  cost  of  52  per  cent  over  the 
average  cost  of  these  articles  to  the  Eastern  roads. 

I  have  nothing  further  to  say  to  the  committee,  unless  it  be  an  oppor- 
tunity presents,  before  I  go  home,  to  meet  Mr  Leeds. 


—  116  — 
Southern  Pactfic  Company. 
(Statement  of  J.  C.  Martin,  Attorney.) 

Earl:  Mr.  Martin.  .  ,     ^     .,          ry     -a    n  + 

Mr  Martin:  It  is  not  the  desire  of  the  Southern  Pacihc  Company  to 
be  heard  before  this  committee  by  its  counsel;  it  is  the  purpose  of  that 
comi)any  to  present  to  the  committee  a  truthful  statement  of  the 
present  condition  of  affairs;  to  ])rescnt  to  this  committee  the  facts  con- 
cerning their  operations  and  earnings,  and  take  the  judgment  ol  the 
committee  as  to  whether  this  bill  or  this  resolution  should  pass  or  not. 

The  hour  is  late,  and  as  the  parties  will  necessarily  be  occupied  some 
time  in  the  presentation  of  the  case  of  the  Southern  Pacific  Company,^ 
I  will,  with  your  permission,  endeavor,  for  the  better  understanding  of 
the  witnesses  who  will  be  produced,  to  give  an  outline  at  this  time  of 
what  the  Southern  Pacific  Company  intends  to  show.  And  yet,  before 
that,  if  I  can  be  of  some  service  to  this  committee  in  pointing  out  what 
I  conceive  to  be  grave  defects  in  this  bill,  both  in  its  principle  and  its 
wording,  I  shall  be  satisfied;  and  with  your  permission  will  endeavor 
to  do  so.  The  first  point— in  the  first  place  I  desire  to  say  that  any 
criticism  that  has  been  made  or  may  be  made  on  this  bill  or  the  prin- 
ciple involved  in  it,  is  not  applicable,  according  to  our  understanding, 
to  the  honorable  Senator  from  Napa,  who  stands  sponsor  for  it  in  the 
Senate.  The  bill  was  not  drawn  by  him,  but  has  been  drawn  b}'^ others, 
and  he  has  presented  it,  possibly  without  thought  or  time  to  investi- 
gate the  matter  in  the  way  he  himself  would  desire  before  becoming 
entirely  responsible  for  a  measure  of  this  character.  It  is  of  the  firsr. 
and  highest  importance  that  every  law  which  affects  a  great  number  of 
people,  and  great  interests,  should  be  so  carefully  and  plainly  drawn  that 
it  may,  in  the  first  place,  express  the  intent  of  the  Legislature;  and  may, 
in  the  second  place,  be  readily  interpreted  and  understood  by  those  to 
whom  it  is  intended  to  apply.  This  bill  does  not  do  so.  That  it  has 
not  received  the  attention  that  a  measure  of  this  importance  should 
receive,  has  been  demonstrated  by  the  numerous  amendments  that  have 
been  suggested  and  proposed  in  the  short  time  that  this  measure  has 
been  V)efore  the  committee.  This  is  a  bill  of  the  Traffic  Association  of 
San  Francisco,  drawn,  I  presume,  by  their  manager,  attorney,  or  by 
their  legislative  committee. 

The  Traffic  Association  is  an  organization  of  merchants  and  gentle- 
men of  San  Francisco,  as  Ave  understand  it,  whose  names  are  not  given 
to  the  puhhc,  but  who  believe  that  the  profits  of  their  business  are  too 
small  and  should  be  increased,  and  that  the  profits  of  the  railroads  are 
too  great  and  should  be  diminished.  I  presume  that  is  the  principle 
on  which  they  are  organized.  As  you  know,  they  have  an  executive  com- 
mittee, whose  names  are  given  to  the  public — ^honorable  and  respected 
merchants  of  San  Francisco — and  they  have  a  legislative  committee, 
whose  duty  it  is,  I  suppose,  to  draw  laws,  and  that  committee  has  arbi- 
trarily drawn  up  this  law. 

When  the  matter  of  legislation  was  first  presented  to  the  public  by 
the  Traffic  Association,  and  I  speak  now  of  a  matter  which  is  common 
knowledge  to  all  of  you,  the  plans  and  purposes  of  legislation  were  dis- 
closed in  what  was  called  the  "Traffic  Association's  pledge,"  which  was 
sent  out  to  all  candidates  to  the  Legislature  of  all  parties,  with  a  hint 


—  117  — 

of  support  in  case  that  pledge  should  be  signed,  and  with  a  suggestion 
of  opposition  to  any  one  who  should  refuse  to  sign  it  in  writing. 

That  pledge,  Mr.  Chairman,  as  you  know — for  I  presume  you  received 
a  copy  of  it — called  for  a  legishitive  proposition  entirely  dilferent  from 
this  one.  There  is  no  similarity  between  the  legislation  proposed  in 
that  pledge  and  the  legislation  as  represented  in  this  resokition  first 
before  this  committee;  and  so  strong  was  the  demand  made  by  the 
Traffic  Association  of  the  gentlemen  who  were  candidates  for  the  Legis- 
lature, that — if  I  recollect  right,  and  if  I  am  wrong  you  will  correct 
me,  Mr.  Chairman — the  signers  pledged  themselves  not  to  adjourn  until 
the  particular  plan  outlined  in  the  pledge  should  be,  I  believe,  success- 
fully accomplished;  or  at  all  events,  they  should  not  vote  to  adjourn 
until  something  was  done  in  the  premises.  The  legislation  outlined  at 
the  time  Avhen  the  resolution  to  amend  the  Constitution  was  i.rst  pre- 
sented here,  was  entirely  different  from  that  outlined  in  the  pledge,  and 
while  that  resolution  has  been  before  this  committee  it  has  been  sub- 
jected to  at  least  two  changes  by  the  proponents  of  the  measure. 

We  have  a  committee  substitute  for  the  original  bill,  so-called,  and 
we  have  pencil  memoranda  and  amendments  to  the  conamittee  sub- 
stitute; at  least  one  such  amendment,  possibly  more.  I  remember  but 
one.  This  committee  substitute  changes  the  plan  of  the  original  bill 
in  this:  An  attempt  was  made  to  divide  the  roads  into  two  classes: 
those  whose  gross  earnings  exceeded  .l!4,000  per  mile  and  those  whose 
gross  earnings  were  $4,000  per  mile  or  less.  Those  whose  gross  earn- 
ings exceeded  the  sum  of  $4,000  per  mile  were  to  be  subjected,  or  to  be 
by  this  bill,  subjected  to,  by  legislative  action,  certain  maximum  rates 
on  both  fares  and  freights;  and  those  whose  gross  earnings  are  $4,00.0 
or  less,  were  not  to  be  subjected  to  that  constitutional  limitation. 

Now,  a  Constitution  is,  as  was  stated  last  night  by  Mr.  Johnson  in  his 
very  able  and  interesting  address,  a  declaration  of  principles,  a  rule  of 
conduct,  binding  on  the  people,  and,  of  course,  on  the  Legislature  of 
the  State,  and  is  supposed  to  last  for  all  time.  It  is  difficult  to  amend. 
It  may  be  amended,  but  it  is  supposed  to  be  so  skillfully  and  perfectly 
drawn  that  it  will  meet  all  conditions  that  now  exist,  and  all  conditions 
that  can  reasonably  be  anticipated.  Now,  the  committee  substitute,  as 
it  was  first  read,  and  under  the  $4,000  proposition — and  I  believe  it  was 
line  17,  page  2 — I  think  the  amendment  suggested  by  Senator  Gesford 
was  this:  After  the  word  "mile"  insert  ''as  shown  by  the  Thirteenth 
Annual  Report  of  the  Railroad  Commissioners  of  the  State  of  Califor- 
nia." Now,  Mr.  Chairman,  I  suggest  to  you  that  that  proposition  is 
not  in  proper  form,  either  for  a  statute  that  makes  laws  for  two  years, 
or  a  Constitution  that  makes  laws  for  many  years.  As  amended,  it 
will  then  read  as  follows: 

"  Until  the  Legislature  shall  prescribe  rates,  as  aforesaid,  or  in  the 
€vent  that  any  such  prescribed  rates  shall,  from  any  cause,  become 
inoperative,  the  rates  of  charges  for  the  transportation  of  passengers  on 
all  railroads  in  this  State,  whose  annual  earnings  are  more  than  $4,000 
per  mile,  as  shown  by  the  Thirteenth  Annual  Report  of  the  Railroad 
Commissioners,  shall  not  exceed  three  cents  per  mile." 

It  is  in  evidence  before  you  that  there  are  a  number  of  roads  whose 
gross  earnings  now  approximate  closely  to  $4,000;  but  as  in  the  Thirteenth 
Annual  Report  of  the  Railroad  Commissioners  their  earnings  are  not 
equal    to    $4,000,    if    this    constitutional     amendment    or    provision 


I 


—  118  — 

should  be  adopted  as  now  amended  and  as  it  stands;  if  those  roads— 
and  they  all  have  great  hopes— should  within  two  years  be  earning 
$10  000  per  mile,  thev  don't  come  under  the  provision  of  the  section, 
because  in  the  Thirteenth  Annual  Report  their  earnings  are  shown  to 
be  less  than  $4,000  per  mile.  And  yet,  if  by  misfortune,  a  railroad 
that  is  earning  more  than  $4,000  per  mile,  and  it  has  been  so 
shown .  in  the  Thirteenth  Annual  Report,  should  have  its  earnings 
reduced  to  $1,000  per  mile,  it  would  still  be  subject  to  this  constitu- 
tional limitation,  because  in  the  Thirteenth  Annual  Report  the 
earnings  were  shown  to  be  $4,000  per  mile.  Is  that  right?  Is  it  the 
understanding  that  that  shall  be  the  gauge  for  all  time;  that  measure 
as  shown  by  the  Thirteenth  Annual  Report  of  the  Railroad  Commis- 
sioners; that  those  figures  shall  be  at  all  times  the  measure  of  Avhether 
or  not  a  railroad  shall  be  subject  to  constitutional  limitations?  If 
there  can  be  any  reasonable  answer  given  to  this  objection,  Mr.  Chair- 
man, from  any  gentleman,  I  would  like  to  hear  it  now. 

Gesford:  You  will  recollect  I  said  in  presenting  that  bill  that  the 
schedule  of  rates  of  fares  and  freights  was  only  for  a  temporary  purpose, 
only  until  the  Legislature  could  fix  the  rates;  they  could  not  fix  them 
in  a  year,  and  they  were  for  that  purpose,  at  the  outset;  that  was  the 
idea. 

Mr.  Martin:  But  that  does  not  relieve  the  bill  from  the  difficulty. 
Remember,  you  are  making  a  constitutional  provision  in  which  you 
declare  that  certain  roads  shall  have  fixed  limitations;  you  have  a 
maximum  limit  for  what  kind  of  roads?  For  roads  whose  gross  receipts, 
according  to  the  Thirteenth  Annual  Report  of  the  Railroad  Commis- 
sioners, are  shown  to  be  $4,000  per  mile  and  over.  What  will  you  do  with 
a  road  which  earns  $3,900  per  mile,  and  in  two  years  from  now  it  amounts 
to  $10,000  per  mile  gross  earnings?  What  will  you  do  with  it?  Is  it 
subject  to  the  constitutional  limitation  or  not?  How  can  it  be?  Will  the 
Thirteenth  Annual  Report  of  the  Railroad  Commissioners  of  the  State  of 
California  show  $10,000,  or  will  it  show  less  than  $4,000? 

(tEsford:  Well,  can  you  fix  on  a  basis?  You  can't  do  it  until  you 
refer  to  some  particular  basis,  can  you? 

Mr.  Martin:  Of  course  I  am  not  fixing  the  bill;  I  am  trying  to  point 
out  what  I  conceive  to  be  defects  in  what  has  been  proposed.  If  these 
defects  exist,  and  if  I  or  you  cannot  make  a  better  schedule  than  that, 
we  should  abandon  the  principle,  because  it  is  unreasonable  to  fix  it  so, 
and  take  some  other  method  of  fixing  the  limit  on  the  roads,  and  when 
they  come  under  the  maximum  of  the  Constitution.  It  is  not  fixed 
now.  The  absurdity  is  apparent  upon  the  face  of  the  bill,  that  for  all 
tinie  roads  may  come  and  roads  may  go,  but  this  constitutional  provis- 
ion goes  on  forever,  and  the  question  is,  when  the  railroads  are  exceed- 
ing the  limit  of  three  cents  per  mile,  and  exceeding  the  California 
Distance  Tariff,  and  are  called  upon  to  answer  for  it,  the  question  is, 
what  did  the  Thirteenth  Annual  Report  of  the  Railroad  Commissioners 
show  your  gross  earnings  to  be?  If  that  report  shows  your  gross  earn- 
ings to  be  $4,000  or  less,  they  are  forever  exempt  under  the  Constitution 
as  changed.  Remember,  this  is  a  constitutional  provision,  not  fixed  for 
eighteen  months  or  for  two  years,  but  fixed  until  the  people  shall  chan<-e 
it.^  1  am  sure  the  committee  appreciates,  without  further  dwelling  on  this 
point  the  point  I  present— the  objection  I  present  to  this  amendment. 
And  It  IS  no  answer  to  this  objection  to  ask,  what  would  you  suegest  in 


—  119 


1-the  place  of  it?  Nor  would  it  be  an  answer  to  it  if  I  said  I  can  suggest 
:  nothing.  It  would  be  an  argument  against  a  principle  that  has  been 
-adopted  that  leads  to  such  absurd  and  unfortunate  results. 

But,  again,  what  would  you  do  with  a  competing  road,  the  road  that 
is  to  be  built  (and  the  only  popular  road  on  earth  is  the  road  that  is  to 
be  built) ;  what  will  you  do  with  the  railroad  that  is  coming  after  awhile, 
that  everybody  is  in  love  with  and  in  favor  of;  what  will  you  do  with 
it?  It  comes  in,  and,  receiving  the  favor  of  the  united  people,  in  their 
business,  of  this  State,  it  gets  all  the  traffic,  and  its  rates  exceed  the  con- 
stitutional limit  everywhere,  and  you  try  and  regulate  them,  and  say: 
''Here,  you  are  charging  too  much.  You  ought  to  be  bound  by  the  Con- 
stitution; you  ought  to  be  limited  by  this  constitutional  provision  of 
three  cents  per  mile  and  the  California  Distance  Tariff."  And  they  say: 
"Oh,  no;  that  only  applies  to  roads  which,  according  to  the  Thirteenth 
Annual  Report  of  the  Railroad  Commissioners,  were  earning  $4,000  per 
mile,  and  that  report  does  not  cover  us.'* 

Under  this  constitutional  provision,  and  by  every  fair  construction  of 
it,  only  those  roads  are  regulated  by  it  whose  gross  earnings  appear  in 
the  Thirteenth  Annual  Report  of  the  Railroad  Commissioners  of  this 
State,  and  there  is  not  any  other  conclusion  to  be  drawn  from  it. 

But  if  the  maximum  were  different;  if  the  Senator  or  myself  were 
able  to  fix  some  better  plan  to  escape  this  difficulty,  what  would  be  the 
result? 

Take  Colonel  Kidder's  road  (the  Grass  Valley  road,  I  think  it  is 
called),  that  has  a  gross  earning  now  per  mile  of  $3,900,  and  they  have 
hopes  next  year  to  come  within  the  limit.  They  are  ambitious  to  get 
out  of  the  class  of  roads  that  are  called  the  "  little  roads  "  before  this 
committee. 

Suppose  this  were  amended  now,  so  as  not  to  limit  this  report  of  the 
Railroad  Commission,  but  to  make  it  general  for  roads  whose  earnings 
may  hereafter  equal  four  thousand  dollars,  or  exceed  it;  make  it  that 
way  and  the  Grass  Valley  road  climbs  up  until  it  reaches  four  thousand 
dollars  and  more.  What  does  the  Constitution  do  then?  It  is  all  right 
until  it  reaches  that  point,  when  the  Constitution  comes  in  and  cuts  its 
rates  in  two,  diminishing  its  revenue  fifty  per  cent;  down  goes  Colonel 
Kidder's  road  from  under  the  constitutional  provision,  and  it  climbs  up 
again,  because  they  are  ambitious;  they  fix  their  rates  until  the  Consti- 
tution drives  them  back;  they  can  fix  their  rates,  and  when  they  do 
that,  they  climb  up  again  and  they  get  within  the  constitutional  pro- 
vision, but  just  as  soon  as  its  head  is  poked  in  that  limit,  the  Constitu- 
tion strikes  it  again  with  this  load,  and  down  it  goes  again  from  under 
the  constitutional  provision.  Isn't  that  a  fair  construction  of  the  opera- 
tion of  that  provision?  If  there  is  any  answer  to  that,  I  would  like  to 
receive  it  now. 

Gesford:  Mr.  Martin,  I  didn't  suppose  you  were  talking  to  me;  I 
don't  want  to  go  into  critical  argument  on  that  proposition;  I  propose 
to  make  a  little  argument  at  the  close,  and  I  will  then  try  and  reply 
to  them  if  I  can.  If  I  cannot  I  will  try  to  propose  something  in  place 
of  it. 

Mr.  Martin:  Well,  we  would  like  to  be  heard,  because  this  is  an 
important  matter,  and  we  present  these  points  so  that  while  we  are 
here  we  would  like  to  have  them  answered,  because  if  you  trust  to  Mr. 
Leeds  and  the  Traffic  Association's  Legislative  Committee,  judging  the 


I 

—  120  —  I 

future  by  the  past,  where  you  have  fallen  into  one  error  you  will  fall 

nto  another      Of  course  we  are  at  a  disadvantage,  we  cannot  be  here 

ahvavs;  we  cannot  stay  here  always,  cannot  be  here  to  hear  the  answer 

0  th^s^  questions,  and  I  am  sorry  that  the  gentlemen  who  are  the  real 
authors  of  this  bill  are  not  here,  when  we  point  out  diihculties  of  this 
character  so  plain,  objections  so  grave,  that  they  are  not  here  to  give  us 
some  light  on  the  subject.  _  ^  -     -u 

But  Mr  Chairman,  there  is  another— it  seems  to  me  to  be— a  serious 
obiection  to  the  bill.  The  first  resolution  that  was  proposed  by  the 
bill  or  resolution,  whichever  it  is  properly  termed  provided  the  same 
California  Distance  Tariff  that  is  now  inserted,  and  I  understand  there 
haK  been  no  change  in  the  figures  of  this  distance  tariff,  no  changes  in 
that  And  it  also  provided  for  this  Western  Classification,  signedby 
Mr  J  T.  Ripley,  who,  if  he  does  not  become  imraortahzed  by  having 
his'  name  inserted  in  the  Constitution,  will  certainly  be  so  by  the 
speech  of  Mr.  Johnson  last  evening;  but  it  was  proposed  m  the  first  bill 
that  this  classification,  too,  was  subject  to  change;  and  while  I  think  it 
was  suggested— I  think  by  one  of  the  members  of  the  committee,  or  the 
Senator  lit  one  of  the  meetings  of  the  committee— that  this  amendment 
does  not  permanently  fix  that  classification  in  the  Constitution,  making 
it  a  part  of  the  Constitution— I  have  read  it  carefully,  and  while  there 
may  be  some  possible  doubt  on  that  question,  I  think  the  fair  construc- 
tion of  that  instrument,  while  it  gives  the  Legislature  the  power  to 
change  rates  within  the  maximum  of  roads  to  which  the  maximum 
applies,  I  am  of  the  opinion  that  a  fair  construction  of  that  instrument 
permanently  fixes  that  Western  Classification,  with  all  its  benefits  or 
demerits,  in  the  Constitution,  itself. 

Now,  a  classification  is  one  thing,  and  the  making  of  rates  another 
thing;  and  while  classification  necessarily  lies  at  the  very  basis  of  rate- 
making,  on  accountof  the  great  number  of  commodities  subject  to  trans- 
portation, yet  it  is  entirely  a  different  thing,  a  distinct  thing,  a  distinct 
matter  from  the  fixing  of  rates.  Classification  is  this:  It  is  a  deter- 
mination of  what  commodities  shall  have  the  same  rate.  That  is  all  a 
classification  is.  And  it  is  made  because  it  is  almost  impossible  to  make 
a  rate-sheet  big  enough,  broad  enough,  so  that  people  could  read  it,  to 
cover  the  thirty-five  hundred  or  four  thousand  clifierent  articles  that  are 
now  the  subject  of  railroad  transportation.  And  to  avoid  this  it  has 
become  necessary  to  group  certain  commodities  together,  and,  we  will 
say,  a  certain  number  being  grouped,  they  are  such  commodities  as 
should  take  equal  rates,  and  they  all  should  be  first-class,  and  the  rate 
is  fixed  for  the  first  class;  and  so  with  the  second  class.  Rate-making, 
then — I  mean  classification — is  but  the  grouping  of  commodities  so  that 
the  rate  may  be  applied  to  them.  Now,  I  think,  Mr.  Chairman,  that 
if  this  constitutional  provision  is  adopted  in  its  present  form,  that 
Western  Classification,  signed  by  Mr.  Ripley,  becomes  a  fixed  portion 
of  this  Constitution,  and  is  not  subject  to  legislative  change. 

Now,  there  are  many  defects  and  difficulties  in  the  Western  Classifica- 
tion outside  of  the  difficulty  and  absurdity  of  placing  it  in  the  Con- 
stitution, which  will  in  the  proper  time  be  explained  to  you  more  in 
detail  than  I  can  give  it  to  you  now,  by  Mr.  Smurr;  but  my  attention 
was  called  by  him  to-day  to  one  proposition,  and  there  are  others,  and 

1  wish  Mr.  Leeds  were  here  to  answer  it.     If  this  classification  becomes 
a  part  of  the  Constitution,  and  it  could  be  proved  in  Court  when  ques- 


—  121  — 

tioned,  it  would  not  be  proved  by  these  books,  it  would  have  to  be 
proved  by  original  records  published  by  State  authority — it  would  have 
to  be  fixed  by  the  original  records  of  the  Western  Classification  Com- 
mittee. 

But  there  are  commodities,  there  are  articles  that  are  not  classified  at 
all,  and  important  ones  to  the  industries  of  this  State.  As  I  said,  my 
attention  was  called  to  one — ore — by  Mr.  Smurr,  and  instead  of  being 
•classified,  that  important  commodity  to  the  transportation  companies 
and  to  the  people  of  this  State,  instead  of  receiving  a  classification  and 
.a  rate,  is,  if  I  have  not  misunderstood  Mr.  Smurr — and  he  will  correct  me 
when  he  comes  on  the  stand  if  I  have  mistaken  him — is  by  the  Western 
Classification  referred  to  a  special  rate.  Now,  what  will  you  do  with 
the  Western  Classification?  You  have  got  to  take  that  special  rate,  to 
which  that  classification  applies,  and  it  does  not  apply  to  California, 
because  the  ore  is  not  carried  under  the  sj^ecial  rate  of  that  Classifica- 
tion Committee,  And  there  are  other  commodities  of  the  same  kind. 
Let  me  just  explain  for  one  moment,  Mr.  Chairman,  how  these  classifi- 
cations are  made.  The  roads  interested  desire,  each  road,  to  protect 
and  foster  the  industries  of  the  line  of  its  own  road;  but  there  are  con- 
flicting industries,  and  for  that  reason  when  the  Committee  on  Classifica- 
tion representing  the  various  roads  merits,  the  classification  is  made  by  a 
■system  of  compromises  and  concessions  until  they  agree  upon  that 
•classification  which  will  bes-t  serve  the  roads  who  are  members  of  and 
represented  by  the  committee. 

East  of  Chicago  there  is  entirely  a  different  classification  from  the 
Western  Classification.  It  is  called  the  Trunk  Line,  or  the  Official  Class- 
ification, and  no  road  east  of  Chicago  uses  the  Western  Classification. 
Efforts  have  been  made — strenuous  efforts — to  get  the  trunk  lines  east 
•of  Chicago  to  unite  with  the  roads  west  of  Chicago  on  a  common  class- 
ification, but  they  won't,  because  it  would  affect  the  industries  of  those 
roads  in  a  manner  so  variously  that  they  are  not  willing  to  yield,  and 
there  is  no  compromise.  To-day  from  Chicago  east  is  the  Official  Class- 
ification, and  from  Chicago  west  is  the  Western  Classification.  Naturally, 
the  Western  Classification  would  more  approximately  represent  the 
commodities  of  this  State,  because  to  some  extent  it  is  used  under  it. 
But  while  the  Western  Classification  is  in  use,  I  am  informed  by 
Mr.  Smurr  there  are  a  thousand  or  more  commodity  rates  which 
are  taken  from  that  classification  and  all  other  classifications  as  well. 
You  can't  do  it  if  you  adopt  this  AVestern  Classification,  because  when  you 
adopt  it  as  part  of  the  Constitution,  or  as  a  law,  the  goods  which 
are  classified  there  must  take  the  same  rate;  and  if  you  take  one 
man's  commodity  out  of  that  class,  you  would  discriminate  against 
the  other  man's  commodity  which  was  left  in  the  class,  and  you  could 
not  do  it  under  other  provisions  of  your  Constitution,  and  therefore  that 
most  important  thing  to  the  industries  of  this  State,  the  commodity 
rate,  would  be  abolished,  except  in  so  far  as  the  distance  schedule  itself 
■does  provide  for  some  three  or  four  commodity  tariffs;  the  rest  would 
be  abolished.  And  among  other  things,  and  while  I  am  not  familiar 
with  this  matter,  and  it  will  be  further  explained  by  the  gentlemen  rep- 
resenting the  Traffic  Department  of  the  Southern  Pacific  Company,  the 
maximum  rate  upon  the  industry  which  greatly  concerns  the  special 
•district  of  Senator  Gesford,  the  wine  industry,  is  placed  by  that  classifi- 
cation in  the  second  class.     Vvhy?     Because  they  don't  make  wine  on 


—  122  — 

the  line  of  those  roads  which  control  the  Western  Classification.  They 
don't  ship  it,  except  to  dealers  generally  in  the  higher  class  wines,  and  this 
wine  comes  in  the  second  class,  and  the  maximum  rate  fixed  by  this 
schedule  would  raise  the  wine  rate  from  Napa,  and  the  points  further  up 
the  valley,  over  and  above  what  the  commodity  rate  which  the  Southern 
Pacific  Company  is  now  giving  the  valley.  Of  course,  generally,  it 
would  not  raise  the  rates,  but  you  can  see  where  the  danger  is  of  adopt- 
ing a  fixed  classification,  taking  away  the  right  to  make  these  com- 
modity rates,  taking  out  these  things  which  are  of  special  interest  to- 
the  people  of  this  State,  taking  them  out  of  the  commodity  class,  which 
is  always  a  lower  rate  than  the  class  rate,  and  fixing  them  formally  and 
forever,  until  the  Constitution  is  changed,  in  the  second  class.  It  would 
be  a  harm  to  the  wine-makers  of  this  State,  which  the  railroad  company 
is  not  disposed  to  inflict  on  them,  but  which  it  would  be  powerless  ta 
avert,  if  wine  Avere  to  remain  forever  in  the  second  class,  and  it  must  so 
remain  if  the  Western  Classification  were  to  become  a  part  of  the  Con- 
stitution; but  aside  from  that,  Mr.  Chairman,  at  the  close  of  the  bill 
is  a  singular  provision,  and  it  comes  under  the  head  of  "Additional 
Rules:" 

"  Railroads  shall  be  considered  independently  in  computing  distances; 
except,  however,  that  a  system  of  railroads  consisting  of  leased,  operated^ 
or  independent  roads  controlled  under  a  common  management,  although 
working  under  different  charters,  shall  be  considered  and  treated  as 
one  road,  and  the  distances  shall  be  computed  over  the  shortest  operated 
line  composed  of  two  or  more  of  said  roads." 

Now,  that  was  supposed  to  be  a  master  stroke  against  the  Southern 
Pacific  Company.  That  is  what  it  was  intended  for;  intended  to  reach 
the  small  roads  of  the  Southern  Pacific  Company;  and  while  the 
Southern  Pacific  Company  is  operating  a  great  many  miles  of  road  in 
this  State,  it  has  some  little  small  branches  that  are  about  as  Aveak  as 
any  that  can  be  presented  here.  But  it  was  the  design  of  the  framer 
of  this  Constitution  to  except  these  little  lines  if  they  belonged  to  the 
Southern  Pacific  Company  from  the  operation  of  the  maximum  clause- 
of  the  Constitution,  and  place  them  under  it. 

The  result  would  be,  of  course,  that  provision  could  easily  be  avoided 
by  any  company  which  would  be  disposed  to  avoid  the  law,  but  the 
Southern  Pacific  Company  is  not.  It  could  be  avoided  at  once  by  can- 
celing its  leases  of  the  little  roads  and  letting  them  become  operated 
under  their  own  management,  and  it  would  not  be  much  more  trouble 
than  a  stroke  of  the  pen  to  do  it;  but  let  us  see  how  that  would  work: 

If  the  gentlemen  who  have  the  little  road  running  up  to  Yreka, 
which  was  built  by  the  men,  women,  and  children  of  that  town,  become 
tired  of  operating  their  road,  and  they  want  to  sell  it  to  get  their  money 
out  of  it,  or  they  want  to  lease  it  to  some  one  so  as  to  have  a  connecting 
road,  they  would  probably  apply  to  the  eoathern  Pacific  Companv.  But 
when  they  come  to  the  Southern  Pacific  Company  we  will  sav,  "What  are 
your  earnmgs?"  They  will  say,  "  $1,500  per  mile."  "  Well,  then,  you 
are  not  subject  to  the  limitation  of  3  cents  per  mile."  "  No."  "  Well," 
we  will  say,  "we  cannot  take  your  road,  because  you  can  run  it  under 
the  maximum  fixed  by  the  Constitution,  and  we  can't.  While  vou  own 
It  you  can  fix  your  rates  regardless  of  this  constitutional  maximum, 
but  It  you  sell  it  to  us  or  lease  it  to  us,  we  can't  do  it."  And  they  have 
to  keep  on  running  their  road. 


I 


—  123  — 

It  might  be  said  it  is  an  advantage  in  compelling  these  people  to  hold 
on  to  the  road;  but  the  principle  is  wrong;  it  does  not  make  any  differ- 
ence who  owns  the  road.  If  roads  are  to  be  classified  according  to  their 
earnings,  are  you  not,  by  this  amendment,  instead  of  classifying  roads, 
which  you  probably  could  reasonably  and  properly  do,  are  you  not 
classifying  owners,  and  can  you  do  that?  Can  you  say  that  any  of 
these  small  roads,  which,  while  in  their  present  ownership,  can  be  oper- 
ated regardless  of  the  constitutional  limitation,  if  it  should  pass  into 
another  ownership,  could  not  be  so  operated?  This  Constitution,  then, 
would  not  apply  to  roads;  it  would  apply  to  persons;  it  would  apply  to 
ownership,  and  not  to  the  roads  at  all.  We  say  it  is  not  right,  even  if  it 
can  be  done. 

Earl:  Mr.  Martin,  could  that  be  done  under  the  Federal  Constitu- 
tion? 

Mr.  Martin;  I  don't  think  so;  but,  Mr.  Chairman,  of  course  it  is  not 
my  purpose  to  raise  constitutional  questions  here.  It  is  proper  for  this 
committee  to  consider  them,  and  they  should,  because  the  committee  is 
bound  to  support  the  Constitution  of  the  United  States  applying  in  this 
State,  and  it  is  proper  for  you  to  consider  it.  It  would  be  well  enough 
for  me  as  the  attorney  for  the  Southern  Pacific  Company  to  say,  when 
you  come  to  the  proposition,  which  the  Constitution  of  the  United  for- 
bids, pass  it;  you  can't  harm  us  much,  because  we  are  protected  by  the 
Constitution;  pass  it  and  yon  can't  enforce  it;  it  would  become  to  us  a 
matter  of  indifference,  but  it  is  a  question  of  the  Legislature  and  of  this 
committee,  because  under  the  Fourteenth  Amendment  of  the  Constitu- 
tion of  the  United  States,  corporations  are  persons,  and  no  State  can 
deny  to  any  person  within  its  limits  the  equal  protection  of  the  law, 
and  that  is  the  declaration  of  the  Fourteenth  Amendment  to  the  Con- 
stitution; and  while  you  class  railroads  and  class  property,  you  can't 
class  ownership;  it  is  contrary,  and  it  is  indefensible  and  improper  of 
itself;  it  deprives  the  gentlemen  who  own  the  road  of  the  opportunity 
of  selling  or  leasing  it.  It  does  not  apply  to  the  Southern  Pacific  Com- 
pany's lines,  because  it  would  let  those  roads  alone  if  the  occasion 
occurred;  but  it  does  apply  to  those  gentlemen,  because  they 
could  neither  lease  nor  sell,  and  so  the  Fourteenth  Amendment  to  the 
Constitution,  which  protects  the  strong  roads  and  the  big  roads,  applies 
also  to  the  owners  of  the  short  roads,  and  you  are  interfering  with  the 
right  of  the  disposition  of  property  of  these  small  roads  when  j^ou  say: 
"If  you  run  them  and  own  them  yourselves  you  shall  not  be  subject  to 
the  constitutional  limits;  but  if  you  sell  them  to  another,  that  person 
shall  not  have  the  use  of  the  property  which  you  had;  you  cannot  con- 
fer upon  them  the  privileges  which  you  have  secured,  to  the  property 
which  you  have  secured  to  yourself  by  investing  your  money;"  and 
doesn't  that  debar  them  of  the  power  of  disposing  of  it?  And  it  is 
often  so,  that  where  an  unjust  effort  is  made  to  reach  particular  persons 
under  the  form  of  law,  that  the  effort  overreaches  itself.  And  this  is  a 
fair  illustration. 

It  was  desired  and  intended  that  if  a  small  road  was  operated  by  the 
Southern  Pacific  Company,  or  any  other  company,  for  that  matter, 
whose  gross  earnings  exceeded  $4,000  a  mile,  that  they  should  not  have 
the  power  to  use  the  property  as  the  original  owners  had.  Now,  as  I 
have  said,  the  Southern  Pacific  Company  have  got  just  as  many  little  roads 
in  this  State  as  the  rest  of  them,  and  the  effect  would  be,  while  they  are 


—  124  — 

extending  and  building  these  lines,  such  as  the  branch  road  in  Colusa 
out  to  Fruto  such  as  the  numerous  little  branch  roads  that  are  being  built 
in  the  San  Joaquin  Valley;  while  they  are  doing  this,  your  constitutional 
amendment  would  compel  them  to  charge  upon  these  little  roads  the  same 
maximum  that  applies  to  the  main  line  of  the  company;  they  couldn  t 
build  their  roads,  and  they  couldn't  operate  them,  and  tney  couldn  t  do  it. 
I  do  not  believe  that  railroad  men,  as  a  rule,  build  railroads  as  a  matter 
of  charity;  they  build  them  just  exactly  as  every  other  business  man 
conducts  his  business,  to  make  money  out  of  it.  And  if  you  put  a  bar, 
if  vou  could  do  it,  in  this  provision,  upon  the  small  branch  roads  of  the 
Southern  Pacific  Company,  it  would  not  build  any  more,  and  they  could 
not  operate  them  without  a  loss,  and  it  is  not  so  charitable  to  the  public, 
I  believe,  as  to  operate  these  roads  for  the  benefit  of  the  public  at_  their 
own  expense  entirely.  Now,  you  can  see  from  any  fair  construction  of 
this  matter  that  the  law  itself  is  defective.  It  is  badly  drawn;  it  was 
aimed  at  the  Southern  Pacific  Company,  but  it  is  like  the  blunderbuss 
loaded  with  scrap  iron;  it  shoots  everybody  in  the  neighborhood,  and 
that  is  why  the  gentlemen  representing  these  small  roads  are  here.  It 
was  not  aimed  at  them,  and  they  were  told  it  was  not  aimed  at  them, 
but  it  reaches  them  all  the  same. 

Does  not  that  show  that  this  bill  has  not  been  drawn  with  that  care 
which  a  property  law,  much  less  a  constitutional  amendment,  should  be 
drawn?  But,  Mr.  Chairman,  this  is  an  endless  subject,  and  I  am  not 
going  into  the  details  of  this  matter  further  than  to  call  your  attention 
to  these,  which  I  conceive  to  be  the  defects  of  this  law;  and  if  there 
could  be  an  answer  shown  to  us  now,  or  if  there  could  be  an  oppor- 
tunity for  us  to  reply  to  the  answer,  or  at  least  consider  it,  we  should 
feel  better  satisfied  than  we  are  to  have  to  leave  this  committee  without 
an  opportunity  of  hearing  the  answers  to  be  made  to  these  objections. 
We  can  see  no  answer  to  them.  Perhaps  it  is  our  fault,  but  it  is  our 
misfortune  that  we  will  not  have  the  opportunity  of  being  enlightened. 

I  don't  know,  Mr.  Chairman,  what  you  will  think  about  this  matter 
when  it  is  submitted;  but  the  Senate  would  like — I  know  the  Senate 
would  give  us  every  opportunity,  and  would  only  be  too  glad  to  have 
this,  or  any  other  objection  pointed  out;  but  as  I  have  said,  Mr.  Chair- 
man, there  have  been  so  many  changes  from  the  beginning,  it  shows 
clearly,  or  ought  to  show  to  every  one,  that  the  attention  to  this  mat- 
ter has  not  been  given  that  its  importance  demands.  And  after  the 
pledge  that  I  have  referred  to,  under  which  some  members  of  the  Legis- 
lature were  elected  and  some  were  not,  after  that  pledge  was  given  out 
as  being  the  plan  and  purpose  of  the  Traffic  Association,  it  wasn't  but  a 
few  weeks  until  entirely  another  but  different  form  from  this  was  also 
announced.  And  I  would  like  to  call  your  attention,  if  you  will 
pardon  me— I  didn't  mean  to  keep  you  so  long — to  what  was  announced 
that  the  California  Trafi^c  Association  contemplated.  Thev  have 
charged  about  so  much,  that  it  is  hard  work  to  keep  up  to  the  pace. 
Nou',  this  is  from  a  paper  by  no  means  unfriendly  to  the  Traffic  Asso- 
ciation, and  I  read  an  extract  from  it,  because  it  is  given  out  to  the 
public  for  the  purpose  of  informing  the  public  of  the  plans  and  pur- 
poses of  the  legislative  committee: 

"We  find,  too,  that  there  is  in  force  in  Kansas  a  schedule  of  railroad 
charges,  termed  the  Kansas  Local  Distance  Tariff,  based  substantiallv 
on  the  idea  of  a  terminal  charge,  and  a  rate  per  mile  per  movement.  It 


—  125  — 

is  found  to  be  (that  is,  the  Kansas  Distance  Tariff)  fair  and  sufficiently 
remunerative  to  the  raih'oads  in  Kansas,  and  we  believe  it  can  safely 
be  adopted  in  this  State  as  a  substitute  for  existing  rates,  to  be  in  force 
until  others  are  lawfully  adopted." 

Now  that  is  a  plain,  square  declaration  that  they  have  drawn  the 
law,  based  upon  the  Kansas  Distance  Tariff,  which  they  believe  to  be 
fair  and  remunerative  to  the  roads  in  California;  that  is  the  proposi- 
tion. Now  you  would  naturally  expect  that  if  a  statement  was  given  out 
to  the  public  in  that  form,  that  when  the  bill  of  the  Traffic  Association 
was  presented,  that  it  would  be  strictly  in  accordance  with  this  declara- 
tion, the  Kansas  Distance  Tariff  which  they  believe  to  be  fairly  remun- 
erative to  the  roads  in  Kansas,  and  sufficient  for  the  railroads  in 
California.  Now,  before  the  rates  in  Kansas  could  be  a  fair  measure 
for  the  roads  in  California,  the  conditions  of  construction  and  operation 
would  have  to  be  the  same,  together  with  the  density  of  the  traffic.  It 
would  be  only  when  all  of  these  conditions  were  the  same  that  the  rates 
of  one  road  could  be  measured  by  the  rates  of  another.  It  was  stated 
by  Mr.  Leeds  that  the  roads  in  California  could  be  operated  and  con- 
structed as  cheaply  as  the  roads  in  Kansas.  Now,  that  was  a  singular 
statement  to  make — that  the  roads  in  California,  over  which  every 
member  of  the  Legislature  has  ridden,  and  some  of  you  over  the  roads 
in  Kansas — to  announce,  as  Mr.  Leeds  did,  that  the  roads  in  California 
were  as  cheaply  constructed  and  as  cheaply  operated  as  in  Kansas.  Is 
there  a  tunnel  in  the  State  of  Kansas?  Is  there  a  mountain  in  the 
State  of  Kansas? 

But,  what  do  you  do  when  you  start  from  San  Francisco?  When  you 
go  north,  you  go  to  the  canon  of  the  Sacramento,  and  reach  the  vicinity 
of  the  Siskiyou  Mountains;  if  you  go  east,  you  have  to  cross  the  Sierras 
before  you  reach  the  State  line.  If  you  go  south,  you  encounter  the 
Coast  Range  and  Tehachapi  Mountains.  There  are  no  mountains  on 
the  west,- because  there  is  no  land;  but  there  is  no  direction  that  you 
can  go  from  San  Francisco  without  going  over  grades  and  through  tun- 
nels and  around  curves,  and  yet  the  statement  is  made  to  this  com- 
mittee, and  in  the  presence  of  the  assembled  gentlemen,  that  the  roads 
of  California  can  be  as  cheaply  operated,  as  cheaply  constructed,  as  the 
roads  in  Kansas.  Now,  we  have  some  showings  on  these  matters;  show- 
ings made  by  Mr.  Curtis,  who  is  in  charge  of  the  tracks  of  the  roads, 
the  maintenance  of  way;  to  be  made  by  Mr.  Gray  and  Mr.  Smurr,  who 
are  in  charge  of  the  traffic  of  the  road;  to  be  made  by  Mr.  Lansing,  the 
Secretary  and  Controller,  who  has  charge  of  the  finances  of  the  road; 
and  we  are  glad  of  this  opportunity  of  showing  to  you,  and  showing  to 
the  public,  so  far  as  we  may  be  able  to  show  the  public,  the  true  con- 
dition of  the  finances  and  earnings,  and  operating  expenses  and  cost  of 
that  road,  and  they  will  be  shown  to  you;  and  while  it  is  an  easy  mat- 
ter to  sneer  at  the  figures  presented  by  railroad  men,  I  undertake  to  say 
that  they  are  entitled  to  equal  consideration  with  other  men  in  other 
business.  And  these  figures  which  they  will  bring  to  you,  and  these 
statements,  are  those  which  are  made  to  the  Directors  of  the  road;  they 
are  from  their  reports,  which  are  made  to  their  stockholders  and  bond- 
holders, and  they  must  be  exact,  because  there  are  more  people  interested 
in  them  than  the  persons  engaged  in  operating  the  road. 

We  will  show  you  these  things  in  order  to  demonstrate  that  the  rail- 
roads could  not  be  constructed  and  operated  as  cheaply  in  this  State  as 


—  126  — 

in  Kansas.  Now,  would  you  not  expect  to  find  the  Kansas  Distance 
Tariff"  which  thev  say  is  sufficiently  remunerative  to  the  roads  m  Kan- 
sas and  they  befieve' ought  to  be  in  California;  wouldn't  you  expect  to 
find  it-  don't  you  expect  that  bill  is  drawn  from  the  Kansas  Rate  Tariff? 
Anybody,  most,  would  believe  it.  Senator  Gesford,  if  he  has  read  this 
announcement  of  the  Traffic  Association,  must,  too,  believe  it;  that  the 
bill  is  drawn  substantially  from  the  Kansas  Distance  Tariff.  Now,  Mr. 
Chairman,  have  you  got  the  bill? 

Earl:  Yes,  I  have  it  here,  Mr.  Martin. 

Mr.  Martin:  Now,  the  Kansas  Distance  Tariff  runs  in  limits  of  five 
miles  and  under;  ten  miles  and  over  five;  fifteen  and  over  ten.  Now, 
Mr.  Chairman,  have  you  got  the  place  for  the  first  class?  The  Kansas 
Distance  Taritt",  which  is  iDelieved  to  be  fairly  remunerative  to  the  roads 
in  Kansas,  and  believed  to  be  the  same  for  the  roads  in  California,  gives 
merchandise  in  cents  per  hundred  pounds,  five  miles  and  under,  13 
cents.     What  is  it  there? 

Earl:  Three  and  three  quarters. 

Mr.  Martin:  Thirteen  cents  in  Kansas  and  3f  cents  in  this  State. 
The  Kansas  Distance  Tariff  for  ten  miles  and  over  five  gives  a  rate  of  15 
cents.     What  does  it  give  in  California? 

Earl:  Four  and  a  half  cents. 

Mr.  Martin:  Four  and  a  half  cents  against  15  cents!  And  the  Kan- 
sas rates  are  presumed  to  be  fairly  remunerative.  Twenty  miles  and 
over  fifteen;  fifteen  miles  and  over  ten  is  18  cents.     What  is  it  there? 

Earl:  Eight  cents. 

Mr.  Martin:  Eighteen  cents  against  8  cents.  Twenty  miles  and  over 
fifteen  is  20  cents  in  Kansas.     How  much  here? 

Earl:  Twelve  cents. 

Mr.  Martin:  Twenty-five  miles  and  under  twenty  is  22  cents  here. 
How  much  is  it  with  you? 

Earl:  Fifteen  cents. 

Mr.  Martin:  Well,  Mr.  Chairman,  I  do  not  wish  to  take  your  time, 
but  there  is  the  Kansas  Distance  Tariff,  and  you  have  the  California 
Distance  Tariff,  and  the  Traffic  Association  announced  that  they  had 
founded  their  bill  upon  that  distance  tariff,  notwithstanding  the  fact 
that  the  roads  in  this  State,  to  our  own  knowledge,  to  the  knowledge  of 
every  man  in  this  room,  are  far  different  in  the  cost  of  construction,  far 
in  excess  of  those  in  Kansas.  That  is  the  California  rate  that  you  have 
read,  and  this  is  the  Kansas  Distance  Tariff'  which  I  have.  Is  it  fair? 
Is  it  right,  to  give  out  to  the  public  in  the  name  of  the  Association  or 
any  member  that  they  are  adopting  the  Kansas  Distance  Tariff"  and 
bring  that  in  after  that  assertion  without  an  explanation — and  even 
the  Senator,  the  Senator  who  introduced  the  bill,  until  this  moment  has 
rested  under  the  belief  that  he  was  introducing  the  Kansas  Distance 
Tariff  instead  of  that  one.  Eighteen  cents,  8  cents;  13  cents  against 
oi;  and  it  runs  up  to  the  distance  of  500  miles,  not  perhaps  so  great, 
but  always  below,  and  materially  below,  the  Kansas  Distance  Tariff. 
Now,  why  is  that?     It  is  not  right  in  a  business  way;  it  is  not  proi)er. 

13ut  we  will  show  you  not  only  that  the  cost  of  construction  and  of 
operating  roads  in  California  is  of  necessity  far  in  excess  of  the  cost  of 
construction  and  operation  in  Kansas,  and  for  that  reason  that  this 
State  ought  to  have,  by  reason  of  this  condition  and  that  excess,  a  much 
larger  rate;  yet  it  is  reduced  all  the  way  through,  and  reduced  in  mate- 


—  127  — 

rial  proportion.  Now,  it  would  simply  be  ruinous  to  the  roads  in  Kan- 
sas even;  the  roads  in  Kansas  could  not  operate  under  it,  and  we  will 
show  to  you  by  the  proper  showing  of  these  officers  of  the  Southern 
Pacific  Company,  the  roads  in  Kansas  to  a  great  extent  are  bankrupt; 
there  is  not  a  mile  of  construction  going  on,  because  their  rates  are  re- 
duced; and  then  with  all  these  conditions  and  differences  in  the  cost  of 
operating  the  roads  in  California,  and  with  the  principle  that  the  Kansas 
Distance  Tariff"  is  remunerative,  fair,  and  believed  to  be  sufficiently  so 
here;  instead  of  being  introduced,  why,  it  reduces  the  figures;  but  I  am 
going  over  ground  that  will  be  more  properly,  more  amply  shown  by  the 
gentlemen  who  will  come  after  me,  and  who  will  not  present  principles, 
but  will  present  facts. 

We  are  much  obliged  to  this  committee  for  the  opportunity  of  being 
present  and  presenting  the  railroad  situation  of  this  State,  so  far  as  the 
Southern  Pacific  Company  is  concerned.  And  we  thank  you  for  your 
patience,  and  the  attention  which  3'ou  have  given,  and  which  you"  will 
give  to  the  conclusion. 

Burke:  Has  the  Western  Classification  a  different  rate  from  the 
Kansas  Distance  Tariff? 

Mr.  Martin:  Let  me  explain.  The  Western  Classification  classifies 
commodities  into  the  first,  second,  third,  and  fourth  classes,  as  you  will 
see  by  the  bill.  Now,  in  California,  under  what  is  called  the  Local 
Classification,  you  will  find  that  articles  in  the  lower  classes  here  are  in 
the  first  class;  some  of  these  articles  by  reason  of  that  classification 
have  a  much  higher  rate  than  they  would  have  if  they  were  in  the 
lower  class.  Articles  in  the  lower  classes,  two,  three,  and  four,  in  Cali- 
fornia would  be  in  the  first  class;  so  that  commodity  has  a  higher  rate 
by  reason  of  its  being  in  the  first  class  and  in  the  second  there.  That 
changes  the  rate,  it  changes  the  class. 

Burke:  I  understand  that,  but  my  question  was,  Mr.  Martin, 
whether  the  Kansas  Distance  Tariff  applies  to  this  Western  Classifica- 
tion, or  whether  there  was  a  difference,  a  different  one. 

Earl:  The  Western  Classification  applies  to  the  Kansas  Distance 
Tariff,  as  Mr.  Leeds  told  you. 

Burke:  But  I  understand  that  the  Western  Classification  does 
apply  in  California. 

Mr.  Martin:  Mr.  Leeds  correctly  stated  that  the  Southern  Pacific 
was  using  the  Western  Classification,  but  it  is  used  in  the  southern 
part  of  this  State;  but  it  is  not  used  in  the  simple  form  as  it  appears  in 
this  book  that  you  have.  • 

Earl:  In  other  words,  the  Western  Classification  to-da}^  does  not  use 
the  rates  set  down  here  in  that  bill? 

Martin:  It  does  use  the  rates  set  down  in  that  bill,  because  the  West- 
ern Classification  applies  to  all  the  rates  in  Kansas. 

Earl:  Do  you  mean,  Mr.  Martin,  that  the  Western  Classification 
which  is  proposed  to  be  adopted  here  applies  to  the  roads  in  Kansas? 
The  classification  of  the  commodities  therein  applies  to  the  thirty-five 
hundred  commodities,  but  the  rate  that  these  commodities  are  to  be 
charged  b}^  the  roads  are  not  the  same  as  the  first  class  here,  and 
second  class  here,  and  third  class  here,  as  set  forth  in  this  distance 
tariff';  the  Kansas  tariff'  is  different  from  the  distance  tariff  which  you 
have  just  now  read. 

Martin:  It  is  different  from  the  distance  tariff  shown  in  this,  that 


—  128  — 

there  are  higher  rates  in  Kansas  than  there  are  in  the  California  tariff, 
and  there  is°no  other  difference.  ,,,.«.  •      t- 

Burke:    There  is  no  such  rate,  and  the  differences   in    Kansas  are 

there"'' 

Maktin-  No,  not  that  I  know  of;  I  have  the  tariff  of  the  road  that 
Mr  Leeds  refers  to,  the  Atchison  road,  and  that  which  is  the  schedule^ 
you  understand  that  the  Western  Classification  apphes  to  this  rate 
sheet,  and  if  the  Western  Classification  is  adopted  it  will  apply  to  this. 


Monday,  February  6,  1893 — 7:30  p.  m. 

Committee  met  pursuant  to  adjournment. 

W.  S.  Woods,  attorney  for  the  Nevada,  California,  and  Oregon  Rail- 
road, addressed  the  committee  as  soon  as  it  was  called  to  order.  He 
said  he  appeared  for  J.  M.  Fulton,  Master  of  Transportation  of  the 
Nevada,  California,  and  Oregon,  who  could  not  be  present.  He  had  a 
letter  from  Mr.  Fulton,  addressed  to  the  committee,  and  read  it.  It 
was  as  follows: 

"Reno,  Nevada,  February  4,  1893. 

''Senator  Earl,  Chairman  Senate  Committee  on  Constitutional  Amend- 
ments, Sacramento: 

"Dear  Sir:  I  notice  by  the  press  that  Mr.  Leeds,  of  the  Traffic  Associa- 
tion, intends  being  in  Sacramento  at  the  next  meeting  of  your  com- 
mittee. He  states  his  willingness  to  answer  any  question  put  to  him 
by  any  one  representing  the  small  railroads  of  California,  and  particu- 
larly myself. 

"Mr.  Chairman,  I  waited  in  Sacramento  from  Tuesday,  the  24th  day 
of  January,  until  late  on  Wednesday  night,  February  1st,  for  Mr. 
Leeds,  that  he  might  explain  to  me  certain  assertions  he  has  made. 

"  I  only  left  then  on  account  of  having  waited  eight  days,  and  no 
Leeds.  I  gave  up  all  hopes,  and  now  do  not  believe  he  will  come  ])efore 
your  committee,  or  I  assure  you  I  would  be  present  Monday  evening 
to  meet  Mr.  Leeds  and  attempt  his  entertainment  for  a  time. 

"  I  ask  your  honorable  committee  to  notice  with  what  perversity  Mr. 
Leeds  asserts  that  the  small  roads  are  not  affected  by  his  bill.  He 
should  explain  why  they  are  not,  and  whether  they  would  be  when 
theirtearning  power  increases  to  the  sinful  point  of  $4,000  per  mile  per 
year  gross  earnings. 

"  Our  table  of  certain  commodities  purchased  in  St.  Louis,  Chicago, 
Philadelphia,  etc.,  with  freight  added,  has  been  criticised  by  Mr.  Leeds. 
The  table  was  given  to  your  committee,  believing  that  it  might  assist 
you  in  coming  to  a  just  conclusion  upon  this  vexed  question,  which  I 
believe  you  and  your  committee  desire  to  do. 

"In  the  criticism  alluded  to,  Mr.  Leeds  says,  I  am  'howling  against 
our  own  interests;'  that  'the  Southern  Pacific  Company  is  robbing  us.' 
Perhaps  so;  and  even  if  it  were  so,  my  statement  of  the  cost  of  those 
commodities  is  still  a  fact,  and,  therefore,  does  it  not  show  that  it  costs 
us  more  to  operate  our  road  than  it  does  Eastern  lines?  Mr.  Leeds  says 
'No;'  I  say,  'Yes.'  Again,  does  the  Southern  Pacific  Company's  Hue 
run  to  Philadelphia,  St.  Louis,  or  Chicago?     Will  Mr.  Leeds  deny  the 


—  129  — 

fact  that  the  rates  paid  by  us  on  the  shipments  enumerated,  and  which 
he  criticises,  are  not  now  lower  than  when  he  was  Chairman  of  the 
Transcontinental  Association;  did  we  then  hear  his  voice  commanding 
a  reduction  of  rates? 

"  Mr.  Leeds  has  made  statements  before  your  committee  that  are 
not  founded  on  facts.  Perhaps — through  ignorance,  perhaps — he  has 
deceived  the  Traffic  Association,  and  is  trying  to  stir  up  a  fuss  where 
there  is  little  cause  for  it.  Mr.  Leeds  has  said  that  he  does  not  see  the 
justice  or  fairness  of  the  criticism  he  is  receiving  by  the  small  roads  of 
this  State.  Let  us  see  about  it.  Mr.  Leeds,  an  employe  of  certain  San 
Francisco  merchants,  personally  having  no  interest  except  the  salary 
he  receives,  comes  before  your  committee  and  advocates  that  you  recom- 
mend for  passage  to  the  Senate  an  amendment  to  uie  Constitution  of  the 
State  of  California,  whereby  the  maximum  charge  of  any  railroad  in  Cal- 
ifornia shall  not,  for  passengers,  exceed  two  cents  per  mile,  and  that  the 
proposed  distance  tariff  affects  every  road,  large  or  small,  up  hill  or 
level,  exactly  alike.  You,  Mr.  Chairman,  by  your  incisive  questions,  of 
which  Mr.  Leeds  did  not  answer  one  half,  showed  the  bill  to  be  so 
devoid  of  common  sense  that  your  committee  adjourned,  that  it  might 
be  changed  and  printed.  It  came  again  before  you  with  a  clause  read- 
ing that  roads  earning  over  $4,000  gross  per  mile  per  year  must  not 
charge  to  exceed  certain  rates  for  passengers  or  freight.  Roads  earning 
less  than  $4,000  per  mile  were  to  be  subject  to  laws  yet  to  be  made  by 
the  Legislature.  Why  did  Mr.  Leeds  attempt  to  have  a  law  passed 
giving  the  small  roads  of  the  State  but  two  cents  a  mile?  If  it  were 
right  and  honest,  why  did  he  change  it?  Was  it  done  through  igno- 
rance, or  was  it  intended  to  do  wrong?  If  the  former,  he  is  not  worthy  of 
consideration;  if  the  latter,  he  committed  a  crime.  The  fact,  however, 
remains,  and  should  be  considered  by  your  committee,  that  he  did 
succeed  in  getting  the  honorable  Senator  from  Napa  to  introduce  the 
proposed  amendment,  which  would  ruin  every  small,  or  large  road,  for 
that  matter,  in  California,  if  it  became  the  law  of  this  State;  and  in 
speaking  upon  the  question  he  said,  if  the  small  roads  did  lose  money, 
it  was  a  bad  investment  they  had  made,  and  no  one  was  at  fault  except 
the  investors.  Now,  he  objects  to  our  criticism,  and  says  we  are  unjust. 
Mr.  Chairman,  I  think  we  are  not;  but  that  Mr.  Leeds,  in  introducing 
or  proposing,  or  causing  to  be  proposed  or  introduced,  such  a  measure, 
has  shown  either  an  evil  mind  or  the  most  dense  ignorance. 

"  Mr.  Chairman  and  gentlemen  of  the  committee,  Mr.  Leeds  scatters 
— he  scatters  badly — he  is  truly  no  good  as  a  railroad  expert.  I  dg  not 
believe  he  is  good  for  the  Traffic  Association  of  San  Francisco,  and  I 
think  all  will  bear  me  out  in  the  assertion  that  he  is  a  rank  failure  as  a 
framer  of  amendments  to  the  Constitution. 

"  Now,  with  what  you  have  not  heard  from  Mr.  Leeds,  and  wath  what 
you  have  heard  from  Mr.  Burgin,  Mr.  Wade,  Mr.  Kidder,  Mr.  Bender, 
and  other  gentlemen  who  have  appeared  before  you,  I  think  you  will, 
when  considering  this  very  important  subject,  place  Mr.  Leeds'  utter- 
ances in  the  niche  where  they  properly  belong.  His  assertion  that  the 
Southern  Pacific  officials  are  handling  the  representatives  of  the  smaller 
roads  to  its  (the  Southern  Pacific  Company's)  advantage,  or  attempting 
to  do  so,  is  not  worthy  of  notice.  It  is  not  a  fact.  It  compares  favor- 
ably, however,  with  other  assertions  made  by  Mr.  Leeds,  and  I  ask  you 
to  remember  the  axiom,  '  false  in  one  thing,  false  in  all.' 
.     9 


—  130  — 

I  shall  resrret  not 


"Should  Mr.  Leeds  ^  Vr^^^^r^^^^^^  ^^^oiZ 
having  been  there  to  have  he  .d  the^  -d  >n_^H^^.^^ 

""W'rii^';rr:'ctji™anind  gentlemen  of  the  comnaittee, 
"  Yours,  most  respecttuliy, 

"J.  M.  FULTON, 
"Master  Transportation  Nevada,  California,  and  Oregon  Railway." 

Southern  Pacific  Company. 

(Statement  of  W.  G.  Curtis,  Assistant  to  General  Manager.) 

Sacramento,  February  1,  1893. 

To  the  Senate  Committee  on  Constitutional  Amendments: 

The  gentlemen  who  are  credited  with  formulating  the  papers  now 
under  consideration  by  your  honorable  committee,  proposing  an  amend- 
ment to  the  Constitution  of  the  Sta^e  of  California,  regulating  the  rat^s 
for  the  transportation  of  freight  and  passengers  to  be  charged  and  the 
classification  of  various  commodities  to  be  made  by  the  railroads  of  this 
State  have,  as  we  understand  from  the  testimony  they  have  presented 
before  you,  based  their  action  upon  the  broad  assumption  that  the  exist- 
ing rates  are  unreasonably  high,  and  the  classification  of  commodities 

arbitrary  and  unjust.  .,..,.         •^       j      en  ve       • 

The  plain  truth  of  the  matter  is  that  the  railroads  of  Cahtornia  are 
now  occupying,  and,  if  left  unhampered  by  arbitrary  and  unjust  restric- 
tions, willcontinue  to  occupy  their  true  and  proper  position  in  relation 
to  the  commercial  and  industrial  development  of  this  State.  Although 
the  classifications  of  freight  may  differ  in  some  respects  from  the  classi- 
fications in  the  Eastern  States,  the  differences,  whatever  they  may  be, 
are  justified  by  the  difference  in  conditions  surrounding  the  operations 
of  the  railwavs.  The  existing  rates,  as  compared  with  rates  prevailing 
in  other  States  of  this  Union,  are  not  higher  in  California,  nor  out  of  a 
fair  proportion  to  the  greater  value  and  cost  of  commodities  in  every 
department  of  industry. 

No  industry  requiring  the  cooperation  of  railway  carriers  has  lan- 
guished, nor  has  the  progress  of  any  legitimate  enterprise  been  impeded 
through  the  failure  or  refusal  of  railway  people  to  provide  the  needful 
facilities  at  fair  rates  and  under  conditions  reasonable  and  just.  On  the 
contrary,  every  project  looking  to  the  development  of  the  State,  and  to 
the  increased  prosperity  of  its  people,  is  fostered  and  encouraged  by  the 
railway. 

It  has  been  given  out  by  the  gentleman  representing  the  Traffic  Asso- 
ciation of  San  Francisco,  who,  we  are  told,  formulated  the  proposed 
amendment  to  the  Constitntion,  and  testified  before  you  in  favor  of  its  pas- 
sage; who  has  not  been  in  the  State  of  California,  I  believe,  more  than  a 
year,  and  whom,  we  believe,  has  traveled  but  little  throughout  the  State, 
but  has  spent  the  m^st  of  the  time  of  his  residence  here  in  the  city  of 
San  Francisco;  who,  when  asked  by  you,  Mr.  Chairman,  was  unable  to 
name  all- of  the  railroads  in  this  State  other  than  the  Southern  Pacific — 


—  131  — 

that  the  .Southern  Pacific  Company  is  the  especial  object  of  attack  by 
himself  and  the  people  lie  represents.  We  cannot  believe  that  he  rep- 
resents the  views  of  the  merchants  of  San  Francisco  or  the  people  of 
this  State.  The  principal  owners  of  the  Southern  Pacific  lines,  Mr. 
Huntington,  Senator  Stanford,  and  their  associates,  were  among  the 
earliest  of  California  pioneers,  and  their  interests  have  been  identified 
with  this  State  ever  since.  They  have  certainly  done  much  to  advance 
the  general  interests  of  the  State;  they  have  done  much  more  than  any 
other  individuals  or  associations  to  induce  the  investment  of  foreign 
capital  in  the  railroads  of  this  State,  which  have  done  so  much  to  build 
up  California.  These  railroads  have  so  stimulated  production  and 
facilitated  transportation  that  not  only  California. wheat,  but  California 
wine,  California  fruits  and  vegetables,  dried  and  in  cans,  find  markets 
in  the  Old  World.  The  experiment  of  shipping  green  fruit  to  England 
has  been  tried.  It  is  not  quite  yet  a  success,  but  it  will  succeed,  and 
shipments  of  California  commodities  to  the  eastern  side  of  the  Atlantic 
will  increase  until  England  and  Germany  will,  if  indeed  they  do  not  now, 
pay  back  to  California  for  its  productions  far  more  than  they  are 
entitled  to  demand  from  the  States,  on  their  capital  invested  within  its 
borders.  We  submit  to  you  that  the  Manager  of  the  Traffic  Associa- 
tion does  not  represent  the  views  of  the  people  who  are  identified  with 
the  permanent  and  enduring  interests  of  this  State;  and  we  believe 
the  majority  of  the  members  of  the  Traffic  Association  agree  in  this 
view. 

With  your  kind  permission,  I  shall  speak  only  of  the  operating 
service,  that  is  to  sav,  the  conditions  affecting  the  work  of  maintenance 
of  equipment,  maintenance  of  way  and  structures,  and  conducting 
transportation,  including  the  train  and  station  service  of  the  railroads 
Dperated  by  the  Southern  Pacific  Company,  formerly  thirty-seven  in 
number  (see  page  362  of  California  Railroad  Commissioners'  report  for 
1892),  but  now  consolidated  into  six  companies.  Officers  of  these  com- 
panies will  ask  your  indulgence  to  present  various  other  matters.  We 
[lave  nothing  to  conceal  from  our  patrons  or  from  you  gentlemen.  Our 
only  desire  is  that  you  shall  know  the  exact  and  literal  truth  with 
aspect  to  our  roads,  their  operating  conditions,  and  relations  to  the 
Dublic. 

Railway  operation  in  California  is  more  expensive  than  in  Eastern 
States;  first,  because  of  the  difference  in  physical  characteristics.  The 
Dhysical  characteristics  of  California  are,  as  compared  with  the 
Vlississippi  Valley  and  Atlantic  Coast  States,  peculiarly  adverse  to  rail- 
vay  construction,  maintenance,  and  operation.  The  State  of  Kansas 
ypifies  the  great  valley  States  west  of  the  Mississippi;  there  are  no 
nountains  in  that  State.  The  general  surface  is  an  undulating  plateau, 
vith  a  gentle  slope  downward  from  the  western  to  the  eastern  border. 
Che  State  of  Indiana,  in  its  topography,  typifies  the  prairie  States  gener- 
dly;  at  least  two  thirds  of  the  State  is  level  or  gently  undulating  land. 
There  are  no  mountains,  or  even  hills,  of  any  size  in  that  State. 

California  has  an  area  of  one  hundred  and  fifty-six  thousand  square 
ailes,  or  about  one  hundred  million  acres  of  land  surface,  which  has 
)een  classified  topographically  as  follows: 


—  132  — 

.,        .   .                              '  82,000  miles,  or  52  per  cent. 

Mountainoiis - —      ^j       ^^   ^         ^g,^^_ 

Ko  hug,  or  "foothills      _  _  25,0U0  miles,  or  16  per  cent. 

Marsirortule' -".'.'"".' 2,000  miles,  or    1  per  cent. 

DeJert  '.L'""."^!'/..." 35,000  miles,  or  23  per  cent. 

rp^^j  _ 156,000  miles,  or  100  per  cent. 

For  the  industrial  development  of  California,  railroads  must  be  built 
and  operated  to  traverse  the  sterile  desert  regions,  and  ascend  over  bar- 
ren mountains,  where  the  expense  of  operation  is  costly,  and  where  no 
traffic  can  be  furnished  to  contribute  toward  tlie  expense  of  operation 
and  maintenance.  The  country  along  nearly  25  per  cent  of  the  South- 
ern Pacific  lines  in  California  furnishes  no  local  traffic  to  be  carried. 
Railroad  lines  connecting  the  central  basin  region  of  California  with 
other  parts  of  the  State,  and  with  adjoining  States  and  Territories,  must 
cross  high  mountain  ranges,  where  the  necessary  cost  of  construction 
and  maintenance  of  the  roads  is  many  times  greater  than  in  the  States 
east  of  the  Rocky  Mountains.  The  railroad  line  of  the  Southern  Pacific, 
connecting  Northern  and  Southern  California,  crosses  the  Tehachapi 
Pass,  at  an  elevation  of  four  thousand  feet;  the  Soledad  Pass,  at  an  eleva- 
tion of  three  thousand  two  hundred  feet;  passing  through  twenty-seven 
tunnels,  one  of  them  one  and  one  quarter  miles  long;  and  between 
Southern  California  and  Arizona,  the  San  Gorgonio  Pass,  at  an  elevation 
of  two  thousand  six  hundred  feet.  The  line  connecting  California  and 
Oregon  crosses  Black  Butte  Pass,  at  an  elevation  of  three  thousand 
nine  hundred  feet,  and  the  Siskiyou  Mountains,  at  an  elevation  of  four 
thousand  one  hundred  feet,  and  passes  through  twelve  tunnels.  The 
Central  Pacific  line,  connecting  California  and  Nevada,  crosses  the 
Sierra  Nevada  Mountains  at  an  elevation  of  seven  thousand  feet,  pass- 
ing through  seventeen  tunnels  and  thirty-three  miles  of  snowsheds. 
The  total  rise  of  strictly  mountain  grades  on  the  railroads  operated  by 
the  Southern  Pacific  Company  in  California  is  over  thirty  thousand 
feet,  in  a  distance  of  a  little  over  five  hundred  miles,  and  on  the  entire 
system,  west  of  Ogden  and  El  Paso,  the  total  length  of  mountain  grade 
is  over  seven  hundred  miles,  and  the  total  rise  nearly  forty-two  thousand 
feet. 

The  power  required  to  move  a  given  quantity  of  traffic  over  these 
mountain  grades  is  from  five  to  seven  times  greater  than  on  the  com- . 
paratively  straight  and  level  lines   of  the  Eastern  so-called   prairie 
States. 

The  profiles  before  you  [various  important  profiles  and  a  relief  map 
of  the  United  States  were  here  exhibited  to  the  committee]  indicate 
the  difference  in  grade  of  the  systems  of  roads  east  and  west  of  the 
Rocky  Mountains  more  clearly  and  forcibly  than  can  be  expressed  in 
figures,  but  it  may  not  be  out  of  place  to  state  that,  for  the  roads  operated 
by  the  Southern  Pacific  Company  in  California,  covering  a  mileage  of 
2,895  miles,  the  length  of  level  track  is  only  548  miles;  the  length  of 
curved  line  646  miles;  the  number  of  degrees  of  curvature  128,319% 
equal  to  3o6  complete  circles;  the  sum  of  ascending  grades  in  feet,  42,862: 
descending  grades,  26,035  feet;  total  rise  and  fall  of  grades,  68.897  feet. 

There  are  86  tunnels  on  the  Pacific  System  lines  of  the  Southern 
Pacific  Company,  aggregating  66,701  feet;  54,000  feet  is  in  the  California 
railroad  system  which  includes  the  Siskiyou  Mountains  along  the 
boundary  line  between   California  and  Oregon;   69  of   these   tunnels, 


—  133  — 

aggregating  49,448  feet  in  length  and  costing  over  $4,500,000,  are  within 
the  State  boundaries  of  California.  These  tunnels  have  been  costly  to 
construct  and  are  expensive  to  maintain.  There  is  practically  no 
similar  expense  for  either  construction  or  maintenance  work  in  the 
Mississippi  Valley  States.  Taking  the  snowsheds  and  tunnels  of  the 
Southern  Pacific  lines  in  California  together,  their  aggregate  cost  is 
over  $6,000,000,  or  probably  a  sufficient  sum  to  build  and  equip  over 
200  miles  of  railroad  in  Kansas.  If  invested  in  Kansas  railroads,  and 
if  the  San  Francisco  Traffic  Association's  estimate  of  uniform  distance 
tariff  covering  railroad  rates  in  that  State  is  correct,  it  might  be 
expected  that  interest  at  a  fair  rate  might  be  earned  upon  this  *6,000,000 
investment;  but  the  investment  as  it  stands  in  California  brings  no 
direct  returns.  It  is  an  extra  cost  connected  with  the  construction  of 
something  less  than  40  miles  of  railroad,  and  a  constant  expense 
is  required  for  maintenance  of  the  heavy  timber  work  required  in  a 
great  portion  of  this  tunneling. 

The  damage  consequent  upon  washouts,  landslides,  and  snow 
blockades,  is  also  exceptionally  great  in  the  mountain  regions.  From 
these  causes,  not  longer  than  three  years  ago,  railroad  communication 
between  California  and  Oregon  was  suspended  for  more  than  two 
months  at  a  time. 

At  present,  on  the  South  Pacific  Coast  road,  between  San  Francisco  and 
Santa  Cruz,  there  is  a  great  landslide  in  the  Santa  Cruz  Mountains,  which 
has  crushed  down  a  tunnel  timbered  and  braced  as  strongly  as  possible. 
A  large  force  of  extra  men,  as  many  as  could  be  placed  on  the  work, 
employing  shifts  to  carry  along  the  work  continuously  night  and  day, 
have  not  succeeded  in  reopening  the  road  for  traffic,  which  has  now 
been  interrupted  thirty-four  days.  This  road  has  been  so  damaged  by 
other  slides  and  washouts  tliat  it  is  more  than  probable  that,  taking 
into  account  the  increase  in  operating  expenses,  together  with  the 
decrease  in  earnings,  consequent  upon  the  interruption  of  traffic,  the 
road  may  not  this  year  earn  enough  to  cover  its  operating  expenses. 
This  line  has  heavy  mountain  grades,  and  considerably  more  tunnels — 
at  least  50  per  cent  more — than  on  the  Pennsylvania  Central  Railroad, 
and  is  one  of  the  roads  mentioned  by  the  gentleman  representing  the 
Traffic  Association  as  showing  excessive  gross  earnings  as  compared 
with  Eastern  lines.  Another  road  mentioned  by  him  in  the  same  con- 
nection is  the  California  Pacific,  operating  115  miles  of  line,  from  Sacra- 
mento to  South  Vallejo,  from  Davisville  to  Knights  Landing,  and  from 
Napa  Junction  to  Calistoga.  This  road  crosses  the  tule  lands  between 
Sacramento  and  AVebster,  being  subject  to  overflow  and  damage  by 
floods,  which,  from  year  to  year,  show  a  tendency  toward  a  greater 
height.  This  particular  road,  for  over  eight  miles,  is  protected  on  both 
sides  of  a  high  embankment  with  a  granite  face  wall,  very  costly  to 
construct.  If  the  high-water  plane  of  the  Sacramento  River  continues 
to  rise,  as  is  probable,  it  will  become  necessary  to  build  up  the  embank- 
ment supporting  the  track  to  a  greater  height,  and,  in  consequence, 
remove  and  replace  this  walling.  The  floods  of  the  present  winter  have 
been  right  up  to  the  grade,  and  the  drift  deposited  by  them  now  lies  at 
the  end  of  the  ties  for  several  miles.  The  timber  work  on  this  line  is 
extensive  and  costly  to  keep  in  repair.  More  than  $100,000  will  have 
to  be  expended  this  year  in  repairs  to  the  bridge  over  the  Sacramento 
River.  Knowing,  as  I  do,  the  requirements  of  this  road  for  mainte- 
nance, I  will  say  that  it  needs  every  dollar  that  it  can  earn. 


—  134  — 

LABOR    EXPENSES. 

The  labor  expense  on  the  railroads  in  the  Southern  Pacific  System 
in  California  generally  averages  more  than  30  per  cent  greater  than  on 
the  roads  east'of  the  Rocky  xAIountains.  ,      -r^., 

It  may  be  noted  that,  in  the  State  of  Kansas,  according  to  the  Rail- 
road Commissioners'  report  for  1891,  page  291,  the  average  daily 
compensation  paid  railway  employes  is  $1  73,  while  in  California  and 
contiguous  States  and  Territories,  the  rate  is  about  $2  57,  or  49  per  cent 
greater  than  in  Kansas.  (On  the  Southern  Pacific  lines  alone,  it  is  at 
least  $2  59.)  It  is  to  be  understood  that  the  daily  rate  of  compensa- 
tion is  computed  on  313  days  in  a  year,  the  basis  commonly  adopted  by 
Railroad  Commissioners  in  various  States. 

As  nearly  as  can  be  estimated,  the  payroll  of  the  Southern  Pacific 
Company  for  services  rendered  in  California  is  $9,700,000  per  annum 
for  about  12,000  employes.  Could  the  rate  of  compensation  be  reduced 
to  the  Kansas  figure  ($1  73  per  day),  this  would  become  $6,470,000,  or 
$3,230,000  less  than  now  paid,  or"  13  per  cent  of  the  amount  earned 
annually  in  California  from  transportation  of  passengers  and  freight. 
At  the  Illinois  rate  of  wages  ($1  93  a  day),  the  saving  would  be 
$2,400,000,  or  about  10  per  cent  of  the  Southern  Pacific  Company's 
earnings  in  California. 

The  diflerence  between  the  rates  of  railway  wages,  as  between  the 
Mississippi  Valley  and  Pacific  Coast  regions,  is  well  typified  by  the 
so-called  Atchison  properties.  For  their  Chicago,  Santa  Fe,  and  Cali- 
fornia line,  the  Railroad  and  Warehouse  Commissioners'  report,  State 
of  Illinois,  for  the  year  1891,  shows  the  average  daily  rate  of  com- 
pensation for  all  classes  of  employes  to  be  $1  06;  for  the  Atchison 
system  in  the  State  of  Kansas,  the  Railroad  Commissioners  in  their 
report  for  1891,  show  a  rate  of  $1  87;  for  the  Atlantic  and  Pacific  Rail- 
road, extending  from  eastern  New  Mexico  westward  through  Arizona 
into  California,  the  rate  is  $2  01;  and  on  the  Southern  California  Rail- 
Avay  properties  the  rate  of  w^ages  is  $2  71,  as  shown  by  the  California 
Railroad  Commissioners'  report  for  1892. 

In  this  connection,  the  attached  table  (Exhibit  A)  is  presented,  to 
show  the  average  compensation  paid  and  class  of  railway  employes  on 
the  Southern  Pacific  and  San  Francisco  and  North  Pacific  roads  in  Cali- 
fornia, as  compared  with  the  Atchison  and  Illinois  Central  roads  in 
Illinois. 

The  efficiency  of  railway  employes— that  is  to  say,  the  number  of 
tons  of  freight  transported  to  each  person  employed — is  somewhat  less 
in  California  than  in  the  Eastern  States. 

FUEL. 

The  principal  sources  of  coal  supplv  for  use  in  California  are  Colo- 
rado, \yyoming,  Washington,  British  Columbia,  Australia,  and  England. 
There  is  no  coal  in  California  suitable  for  use  on  locomotives,  while,  on 
the  other  hand,  roads  east  of  the  Rockv  Mountains  generally  run 
through  coal  mines,  not  only  producing  coal  for  their  own  operations, 
but  being  an  important  item  of  commercial  tonnage  to  be  moved. 

The  cost  of  fuel  on  Pacific  Coast  roads,  l)eing  fullv  20  per  cent  of  the 
total  expenditure  for  maintenance  and  operation,  Is  a  very  important 


—  135  — 

item  to  be  considered  in  fixing  railway  rates.  The  total  cost  per  ton  for 
coal,  delivered  on  locomotive  tenders,  for  the  past  five  years,  on  the 
Southern  Pacific  Company's  lines  in  California,  is  between  $6  40  and 
$6  50.  This  is  a  lower  rate  than  the  similar  average  prices  paid  by- 
other  roads  in  this  State,  for  the  reasons,  first,  that  through  the  owner- 
ship or  control  of  coal  mines  and  of  ocean  steam  colliers  by  controlled 
or  friendly  companies,  the  Southern  Pacific  is  able  to  secure  the  output 
from  such  mines  at  a  minimum  rate,  and  to  so  maintain  its  standing  in 
the  market  as  to  prevent  combination  by  other  mine  or  ship  owners,  or 
"cornering"  by  dealers  to  unfairly  raise  the  price  of  fuel  required  by 
the  Southern  Pacific  Company. 

For  the  year  1891 ,  the  cost  of  fuel  per  mile  run  by  locomotives  on  the 
Pacific  System  lines  of  the  Southern  Pacific  Company  was  19.12  cents, 
which  is  somewhat  lower  than  the  cost  in  California.  As  against  this, 
we  find  the  corresponding  cost  on  various  Eastern  roads  to  be: 


Road. 


Cost  Fuel 

per  Mile 

Run — Cents. 


Year. 


Denver  and  Rio  Grande  Railroad 

Chicago,  Rock  Island,  andracitic  Railway  .. 
Lake  Shore  and  Michigan  Southern  Railway 

Missouri  Pacific  Railway 

Wabash  Railway ' 

Chicago  and  Northwestern  Railway 

Atchison,  Topeka,  and  Santa  Fe  Railroad 

St.  Louis  and  San  Francisco  Railway 

Average 


4.55 

5.78 
5.18 
5.89 
4.50 
6.89 
8.57 
6.42 


5.96 


1891-2 

1890-1 

1891 

1891 

1890-1 

1890-1 

1891-2 

lo91-2 


The  gentleman  representing  the  Trafl&c  Association  of  San  Francisco 
has  testified  before  you  that  on  account  of  the  equable  climate  in  Cali- 
fornia there  is  required  only  fifty-six  pounds  of  coal  to  run  a  locomo- 
tive one  mile,  while  double  the  quantity  is  required  to  perform  the  same 
service  in  Eastern  States.  He  has  taken,  in  support  of  this  assertion,  the 
report  of  the  Atchison,  Topeka,  and  Santa  Fe  Railroad  System  for  the 
year  ending  June  30,  1892,  and  the  annual  report  of  the  Southern  Pacific 
Company  for  the  year  1891.  In  connection  with  tlie  figures  he  has 
produced  from  these  reports,  he  carefully  avoided  to  state  to  you  that 
although  the  quantity  of  fuel  used  per  mile  run  appeared  to  him  greater, 
the  cost  of  fuel  per  locomotive  mile  on  the  Atchison,  Topeka,  and  Santa 
Fe  Railroad  system  is  shown,  on  the  same  page  with  the  other  figures 
he  considered,  to  be  8.57  cents,  while  on  the  Pacific  System  lines  of  the 
Southern  Pacific  Company  the  cost  of  fuel  per  mile  run  is  shown  to  be 
19.12  cents. 

Neither  did  he  tell  you,  which  is  true,  that  those  statistics,  instead  of 
representing  the  conditions  east  of  the  Rocky  Mountains,  apply  to 
seven  thousand  one  hundred  and  thirty  miles  of  the  Atchison  System, 
covering  railroads  in  the  Republic  of  Mexico,  the  Atlantic  and  Pacific 
Railroad  in  the  Territories  of  Arizona  and  New  Mexico,  and  the  South- 
ern California  Railway  in  this  State,  only  about  one  seventh  of  the 
mileage  being  located  in  the  State  of  Kansas. 

Further,  there  is  a  blunder  in  computations,  leading  to  grossly  errone- 
ous results,  but  apparently  the  gentleman  lacked  the  judgment  and 
practical  experience  in  railway  operation  to  detect  the  error.     As  shown 


—  136  — 

by  their  1S91  report,  the  Southern  Pacific  Company  (Pacific  System) 
locomotives  ran  20,356,680  miles,  consuming  against  this  mileage 
570,102  tons  of  coal,  and  141,793  cords  of  wood.  This  141,793  cords  of 
wood  was  not  taken  into  consideration  in  Mr.  Leeds'  calculations,  but 
it  was  used  largely  in  locomotives  running  over  the  Sierra  Nevada 
Mountains,  over  the  Siskiyou  Mountains,  and  on  the  lines  in  Oregon. 
He  simply  ignored  the  wood  altogether,  and  took  the  total  engine 
mileage  running  with  wood  as  well  as  coal,  and  divided  it  into  the  coal 
aloner  thus  producing  his  figure  of  fifty-six  pounds  of  coal  per  loco- 
motive mile.  From  one  and  a  quarter  cords  of  wood  to  two  cords  are 
required  to  enable  a  locomotive  to  perform  the  same  service  as  with  a 
ton  of  coal.  The  rule  commonly  used  by  Eastern  roads  is  to  compute 
one  and  one  half  cords  of  wood  equivalent  to  one  ton  of  coal.  Making 
that  allowance  in  this  case,  we  find  that  sixty-five  pounds  of_  fuel, 
instead  of  fifty-six  pounds,  are  required  to  run  a  locomotive  one  mile  on 
the  Pacific  System  lines  of  the  Southern  Pacific  Company.  Now,  as  to 
the  gentleman's  figures  on  the  Atchison,  Topeka,  and  Santa  Fe  road: 
Page  82  of  the  annual  report  of  the  Atchison,  Topeka,  and  Santa  Fe 
Railroad  Company,  for  the  fiscal  year  ending  June  30,  1892,  shows  the 
miles  run  by  locomotives  to  be  34,383, -145;  the  tons  of  coal  used,  1,354,- 
693;  cords  of  wood  used,  31,565.  Again,  figuring  the  wood  at  one  and 
one  half  cords  equal  to  one  ton  of  coal,  we  have  the  equivalent  of  coal  of 
1,375. 603  tons,  or  2,751,206,000  pounds,  used  by  locomotives  running 
34,383,445  miles.  Dividing  this  mileage  into  the  fuel,  we  find  the 
Atchison  lines  in  question,  including,  with  the  lines  in  Kansas,  those 
also  in  California,  Texas,  and  Mexico,  used  eighty  pounds  of  coal  to  run 
a  locomotive  one  mile,  instead  of  one  hundred  and  eight  pounds,  as 
stated  by  Mr.  Leeds.  It  would  appear  that  his  figures  were  computed 
by  taking  the  total  quantity  of  fuel  as  above  used  by  locomotives  in 
all  classes  of  service  and  dividing  it  by  the  mileage  onh'-  of  those  loco- 
motives which  run  in  revenue  train  service;  while  the  correct  compari- 
son on  the  face  of  the  figures  is,  for  the  Atchison  lines  under  consideration, 
eighty  pounds  of  coal  per  locomotive  mile,  and  for  the  Pacific  System 
lines  of  the  Southern  Pacific  Company  sixty-five  pounds  of  coal  per 
locomotive  mile.  It  is  not  true  that  the  Atchison  lines  in  question 
correctly  typify  the  coal  consumption  of  the  Mississippi  Valley  region. 
By  further  investigation,  Mr.  Leeds  might  have  found  that  the  con- 
sumption of  fuel  to  move  a  car  one  mile  on  the  Southern  Pacific 
Company,  Pacific  System,  was  7.18  pounds;  on  the  Missouri  Pacific 
Railway,  operating  mainly  in  Kansas  and  Missouri  and  entirely  in  the 
Mississippi  Valley,  6.8  pounds;  on  the  Atchison,  Topeka,  and  Santa  Fe, 
7.8  pounds;  this  slightly  higher  figure  being  undoubtedly  due  to  the 
fact  that  a  very  large  portion  of  the  Atchison  line  here  considered  lies  in 
Mexico,  Arizona,  and  Cahfornia,  where,  as  a  matter  of  fact,  and  by 
reason  of  the  difference  in  physical  characteristics,  more  coal  is  required 
to  haul  a  car  one  mile  than  is  necessary  in  the  Mississippi  Valley. 
The  truth  of  the  matter  is,  as  is  well  known  to  practical  railroad  meii, 
that  if  there  is  any  difference,  more  coal  is  required  to  perform  a  given 
amount  of  train  service  in  California  than  in  the  Eastern  States.  The 
following  figures  for  various  lines,  including  the  Atchison.  Topeka,  and 
Santa  Fe,  and  the  Northern  Pacific,  both  of  which  extend  to  the  Pacific 
Coast,  corroborate  this  Tact: 


—  137 


Road. 

Year. 

Pomiiis  of 

foal  per 
Civr  Mile. 

S.  P.  Co.  (Pacific  System) 

1891 

18i)2 

189U-91 

1891 

18;:0-91 

1890-91 

1891-92 

1891-92 

1S91 

1890 

1891 

7.18 

D.  &  R.  G.  R.  R 

8.8 

C.  R.  I.  &  P.  Ry. - 

6.18 

Mo.  Pac.  Rv 

6.8 

Wabash  Uy. 

6  5 

C.  (^  -\'.  W.  IJv 

7.3 

A.  T.  &  S.  F.  Rv.       -     -                     

78 

St.  L.  &  a.  F.  R'.  R.. 

7.5 

Nor.  Pac.  R.  R... 

7  2 

•Chicago  ct  Alton ..  

6  75 

Penn.  R.  R.  Co 

5.82 

Average  Eastern  roads,  7.06;  Pacific  System,  7 


18. 


I  should  not  fail  to  mention  in  this  connection  that  many  Eastern 
roads  running  over  coal  fields  and  taking  their  coal  supply  to  locomo- 
tives from  the  mouth  of  the  mines,  find  it  to  their  advantage  to  burn 
screenings  and  coal  slack,  which  is  either  purchased  at  a  low  figure,  or 
in  many  cases,  given  to  them  by  the  mine  owners,  who  are  desirous  of 
getting  rid  of  this,  to  them,  unsalable  material,  this  slack  going  into 
the  fuel  account,  ton  per  ton,  with  the  good  coal,  while  its  cost  is  merely 
nominal. 

The  average  cost  per  mile-  run  for  fuel  for  the  Southern  Pacific  Com- 
pany's lines  in  California  for  the  past  five  years  averages  21.5  cents, 
Avhich  is  from  15  to  25  per  cent  higher  than  the  total  cost  of  running  a 
locomotive  one  mile  on  many  Eastern  roads,  including  the  expense  of 
fuel,  repairs,  service  of  engine  men,  oil,  waste,  storage,  etc. 

COST    OF    MATERIALS. 

The  average  cost  of  materials  for  railway  construction  and  mainte- 
nance is  generally  higher  in  California  than  in  the  Mississippi  Valley. 
Pig  iron,  suitable  for  the  manufacture  of  wheels  and  many  classes  of 
•castings  used  for  rolling  stock,  bridges,  etc.,  must  come  from  the  East, 
and  the  handling  charges  laid  down  at  our  machine  shops  here  in  Sac- 
ramento increase  the  cost  from  80  to  40  per  cent,  as  compared  with 
similar  cost  to  Eastern  manufacturers  of  railway  supplies.  The  insur- 
ance, freight,  primage,  and  handling  charges  on  steel  rails  make  the 
cost  of  this  material  here  more  than  30  per  cent  higher  in  California 
than  in  the  East.  Many  other  materials  for  railway  construction  Avork, 
as  fishplates,  bolts,  nuts,  spikes,  as  well  as  tools,  machinery  of  all  kinds, 
•either  manufactured  in  the  East,  and  shipped  out,  or  manufactured 
here,  are  relatively  more  costly  here  in  about  the  same  proportion,  that 
is  to  say,  from  30  to  50  percent  higher.  It  costs,  for  instance,  at  the 
present  time,  $1,000  to  bring  a  locomotive  from  Eastern  works  to  Cali- 
fornia. The  Pacific  Coast  produces  no  coal  suitable  for  foundry  uses 
•or  bhacksmith  work,  nor  anthracite  coal,  required  for  heating  cars. 
Both  Lehigh  and  Cumberland  coal,  for  these  purposes,  a'-e  brought  from 
the  Atlantic  States,  the  transportation  and  handling  charges  more  than 
■quadrupling  its  cost  to  California,  as  compared  with  Eastern  railroads. 

Oak  lumber  for  draft  timbers  for  cars,  and  for  many  other  purposes 
in  building  and  repairing  rolling  and  floating  stock,  costs,  f.  o.  h.,  in 
Kentucky  and  Indiana,  from  -$12  to  $15  per  thousand  feet,  board  meas- 


—  138  — 

ure.  The  expense  of  freight  and  handling  brings  the  minimum  cost  in 
Sacramento  up  to  $70  per  thousand  feet,  board  measure.  The  current 
market  quotation  in  San  Francisco  is,  I  believe,  $90  per  thousand  feet, 
board  measure. 

With  the  existing  and  prospective  volume  of  traffic  to  be  moved,  the 
rates  for  the  transportation  of  freight  and  passengers  in  California 
should,  on  account  of  the  higher  cost  of  labor,  fuel,  and  miscellaneous 
supplies,  to  say  nothing  of  the  greater  requirements  for  fixed  charges 
on  account  of  the  higher  cost  of  the  roads  in  California,  be  at  least  35 
per  cent  higher  than  similar  rates  which  would  be  fair  and  equitable 
in  Eastern  States. 

In  this  connection,  it  is  proper  to  state,  that  because  the  States  and  Ter- 
ritories adjoining  California  on  the  east  do  not  produce  lumber  or  hardly 
anything  that  is  required  in  the  maintenance  of  the  Southern  Pacific  line 
in  those  regions,  many  classes  of  materials  are  bought  in  California  for 
operations  outside  the  State,  and  many  articles  are  manufactured  in 
California  from  crude  materials  purchased  here  and  shipped  over  for 
the  operation  of  the  road  and  maintenance  of  its  way  and  structures  in 
adjoining  States.  For  these  reasons,  tlie  amount  paid  out  by  the 
Southern  Pacific  Company  to  California  dealers  and  producers  exceeds 
the  earnings  of  the  company  on  freight  and  passengers  taken  up  and 
laid  down  in  California. 

In  summarizing  his  views,  the  Manager  of  the  San  Francisco  Traffic 
Association  stated,  in  effect,  that  the  railroad  earnings  per  mile  in  Cal- 
ifornia were  greater  than  in  Nebraska,  Kansas,  and  contiguous  States,, 
and  that  the  cost  of  operating  roads  in  California  was  not  greater  than 
in  those  States.  As  a  matter  of  fact  the  cost  of  operating  railroads  in 
California  is  very  much  higher  than  in  the  region  he  mentioned,  and 
railroad  men  who  have  made  a  study  of  these  things  will  all  agree  that, 
aside  from  the  higher  cost  of  other  items  of  expenditure,  if  the  rail- 
roads in  that  region  were  obliged  to  pay  for  labor  and  fuel  the  rates 
which  apply  on  the  Southern  Pacific  lines  in  California  to-day,  they 
would  not  earn  their  bare  expenses  of  operation.  Figures  are  not  nec- 
essary to  prove  this  proposition  to  railway  experts,  who,  from  practical 
experience  and  personal  observation,  have  informed  themselves  as  to 
the  difterence  in  operating  conditions.  As  corroborative  of  this  fact, 
however,  we  present  to  your  consideration  a  statement  compiled  from 
the  Railroad  Commissioners'  report  of  the  State  of  Illinois  for  the  year 
1891;  also  a  similar  statement  of  the  five  principal  roads  in  the  State 
of  Iowa. 

[See  exhibits  marked  "B"  and  "C."] 

Permit  me  to  quote  to  you  from  the  last  published  report  of  the 
United  States  Interstate  Commerce  Commission  on  "  Statistics  of  Rail- 
ways of  the  United  States,"  commenting  on  the  statistics  compiled 
under  authority  of  the  Commission,  which  are  believed  to  be  the  most 
complete  that  have  yet  been  prepared,  the  railways  of  the  United  States 
being  1:hereiri  divided  into  ten  territorial  groups: 

"  It  is  believed  that  the  attempt  to  group  statistics  will  be  completely 
justified  by  the  facts  presented  in  the  present  report,  for  the  compari- 
sons which  it  renders  possible  throw  new  and  important  light  on  the 
operations  of  railways  in  the  United  States.  They  show,  for  example, 
tlK^  great  divergence  in  the  conditions  under  which  railways  are  oper- 
ated.    Ihus,  whether  we  consider  the  gross  earnings  per  mile  of  line. 


—  139  — 

the  operating  expenses  per  mile  of  line,  number  of  locomotives  per  one 
hundred  miles  of  line,  passenger  mileage  per  mile  of  line,  freight  mileage 
per  mile  of  line,  revenue  per  passenger  per  mile,  revenue  per  ton  per 
mile,  per  cent  of  passenger  earnings  to  total  earnings,  per  cent  of  freight 
earnings  to  total  earnings,  value  of  railway  projierty  per  mile  of  line, 
or  any  other  prominent  fact  pertaining  to  railway  economy,  the  varia- 
tions are  so  great  as  to  dispel  the  thought  that  there  is  any  approach 
towards  uniformity  in  the  conditions  under  which  railways  are  operated 
or  in  the  administrative  rules  to  which  they  conform." 

Among  other  comparisons  made  of  those  groups,  the  statistician 
shows  that,  out  of  76,207,000,000  tons  of  freight  carried  one  mile  in  the 
United  States,  only  1,944,000,000,  or  2.7  per  cent,  were  moved  in  group 
number  ten,  including  California,  the  largest  in  area  of  all  the  groups. 
Out  of  11,347,000,000  passengers  carried  one  mile  in  the  United  States, 
only  631 ,000,000,  or  5.8  per  cent,  were  in  group  ten.  Of  the  62,625,000 
pef)ple  reported  by  the  census  of  1890,  only  2,850,000  were  in  the  States 
and  Territories  of  Washington,  Oregon,  Idaho,  Nevada,  California,  Ari- 
zona, and  the  western  portion  of  New  Mexico,  or  3.7  per  cent. 

OPERATING    EXPENSES. 

Of  the  total  expense  of  operating  and  maintaining  a  railroad,  about  9 
per  cent  is  for  general  and  miscellaneous  expense,  including  administra- 
tion expenses,  printing,  taxes,  etc.,  commercial  agencies;  22  per  cent  for 
maintenance  of  way  and  structures;  15  per  cent  for  maintenance  of  loco- 
motives, cars,  and  other  equipment;  24  per  cent  for  wages  of  engineers, 
firemen,  station  expense  for  agents,  clerks,  and  laborers,  telegraphers, 
wages  of  conductors,  brakemen,  switchmen,  flagmen,  and  watchmen;  30 
per  cent  for  fuel  for  locomotives,  steamers,  train  and  station  supplies, 
roundhouse  labor,  fuel,  station  attendance,  heating,  lighting,  and 
inspecting  cars  and  stations,  lubricating  cars,  loss  and  damages  to 
freight  and  other  property,  expense  of  sleeping  cars,  parlor  cars,  etc. 

The  tendency  of  many  people  to  overestimate  the  earnings,  and 
undervalue  the  expenses  of  a  railroad,  most  probabl}^  arises  from  the 
fact  that  the  patrons  of  a  railroad  company  in  their  various  trans- 
actions connected  wdth  transportation  are  chiefly  concerned  with  the 
rates  charged;  they  are  not  called  upon  to  inform  themselves  with  re- 
spect to  the  cost  of  transportation  and  expenditures  other  than  that 
which  may  come  under  their  direct  notice,  as  necessary  for  the  receipt 
and  delivery  of  freight,  the  sale  of  tickets,  and  the  running  of  trains. 
In  other  words,  it  is  probable  that  the  most  of  railway  patrons  have 
some  appreciation  of  the  24  or  25  per  cent  of  the  total  operating  expenses 
required  for  engineers,  firemen,  conductors,  brakemen,  telegraph  oper- 
ators, station  agents  and  clerks,  switchmen,  flagmen  and  watchmen,  as 
above,  but  understand  little  or  nothing  about  the  75  or  76  per  cent  of 
the  expenditures  which,  so  far  as  they  are  concerned,  do  not  enforce 
themselves  upon  their  attention  in  any  way,  seeming  to  go  on  easily, 
and  to  be  conducted  wdth  so  little  visible  effort  as  apparently  not  to 
require  a  great  expenditure  of  money. 


—  140  — 

MAINTENANCE    OF    SNOWSHEDS. 

In  California  there  is  something  over  thirty-four  miles  of  snowsheds 
which  must  be  maintained.  The  average  annual  cost  of  snowshed 
nuiintenance  for  the  past  four  years  has  been  in  round  numbers 
$15)4,000.  On  the  Eastern  roads  in  question,  there  is  nothing  com- 
parable with  this  expense.  The  snow  service  is  also  excessively  costly 
on  the  California  lines.  For  the  past  four  years  the  average  yearly 
cost  has  been  in  round  numbers  $137,000.  In  1890,  in  the  last  snow 
blockade,  the  cost  of  snow  service,  including  the  construction  and  pur- 
chase of  new  snowplows  and  other  appliances  for  clearing  the  track, 
was  in  round  numbers  -$500,000.  No  roads  east  of  the  Rockies  are 
obliged  to  remove  snow  under  such  great  difficulties  as  the  Southern 
Pacific.  The  snowfall  with  us  is  deeper  and  heavier  on  the  Sierra 
Nevada  Mountains  than  anywhere  east  of  us. 

The  snowsheds  are  at  all  times  exposed  to  damage  by  fire.  Our 
losses  last  year  from  this  cause  were  not  less  than  $75,000. 

TIES. 

I  must  not  omit  mention  of  the  railroad  tie  question  in  order  to 
confess  that,  when  we  can  no  longer  utilize  them  in  the  track,  we  do 
use  some  of  them  for  fence  posts,  and  some  to  kindle  fires  in  locomo- 
tives; some  few  we  sell  to  farmers,  and  I  suppose  we  must  save  as 
much  as  $5  per  mile  of  road  by  doing  so,  instead  of  burning  them  up, 
which  is  the  common  way  of  disposing  of  them,  and  is  the  manner  we 
get  rid  of  our  pine  ties,  and  by  the  way,  about  one  third  of  these  ties 
we  use  are  pine. 

We  also  practice  many  other  economies  not  thought  of  in  the 
Eastern  States  in  our  struggles  against  adverse  physical  conditions 
surrounding  our  operations.  A  prominent  railroad  expert  once  said  to 
me,  after  spending  some  seven  weeks  in  a  thorough  and  critical  exami- 
nation of  our  lines,  that  from  the  great  care  and  economy  he  observed 
in  the  use  of  all  our  materials,  he  was  satisfied  that  we  must  have  a 
place  somewhere,  where  we  made  things  no  longer  useful  for  railroad 
purposes  into  soap,  and  he  wanted  to  see  that  soap  factory  before  he 
left  us.  Redwood  ties  do  resist  decay  better  than  the  oak,  cedar,  and 
chestnut  ties  commonly  used  in  the  Eastern  States,  but  they  crush 
down  under  the  rail,  and  on  many  of  our  lines  are  thus  worn  out  in 
a  shorter  time  than  required  for  pine  and  fir  ties  to  fail  by  decay.  By 
reason  of  the  softness  of  these  ties,  their  life  on  curves,  of  which  we 
have  many,  is  shorter  than  on  straight  track.  Our  ties  are  trans- 
ported long  distances  and  are  handled  over  a  good  many  times  on  their 
way  from  the  forests  on  the  northern  coast  of  this  State,  via  the  ocean, 
to  point  of  use.  On  a  general  average,  the  cost  of  tie  renewals  is  a 
little  more  in  CaHfornia  than  in  the  Mississippi  Valley.  The  fol- 
lowing figures  corroborate  this: 


--  141  — 

Comparative  Cost  of  Tie  Renewals. 


Road. 


Mileage  of 

all  tracks, 

includiug 

sidings. 


Ties  used 

in  renewals 

per  mile 

of  track. 


Mileage  of 

main  line 

track. 


Cost  tie 
renewals 
per  mile, 
main  line. 


Year. 


S.  P.  Co.,  Pac.  S.  ... 

Nor.  Pac.  R.  R 

A.,  T.  &S.  F 

St.  L.  &  S.  F 

D.  &  R.  G.  R.  R.  ... 

Tex.  &  Pac.  Ry 

C.  &N.  W.  Ry 

Wabash  Ry. 

C,  R.  I.  &  P.  Ry..-. 


5,639 

No  data. 

No  data. 

No  data. 

No  data. 

No  data. 
5,581 
4,070 
4,197 


240 

No  data. 

No  data. 

No  data. 

No  data. 

No  data. 
214 
171 
135 


4,711 
4,349 
7,130 
1,893 
1,640 
1,499 
4,273 
No  data. 
3,409 


$1.30 

124 

90 

113 

105 

114 

110 

No  data. 

73 


1891 
1891 
1891-2 
1891-2 
1891-2 
1891 
1890-1 
J^o  data. 
1890-1 


Average,  except  Southern  Pacific  Company  (Pacific  System),  .$104. 
Southern  Pacific  Company  (Pacific  System),  $130. 

At  San  Francisco  the  expense  and  maintenance  of  ferry  and  transfer 
steamers,  and  docks  and  wharves,  is  much  greater  than  in  the  Missis- 
sippi Valley  States.  The  cost  under  these  headings  to  the  Southern 
Pacific  Company  annually  is  about  $753,000. 

Water  supply  for  locomotives,  train  and  station  supplies,  and  many 
items  other  than  those  I  have  mentioned,  are  higher  with  us  than  in  the 
East. 

SLOW   DEVELOPMENT    OF    CALIFORNIA. 

California,  in  many  things  other  than  its  physical  geography,  is  an 
exceptional  State,  and  it  is  just  about  as  difficult  to  force  its  indus- 
trial development  along  the  same  lines  as  have  been  followed  in  the 
development  of  the  Mississippi  Valley,  as  it  would  be  to  level  down  the 
mountains  and  fertilize  the  deserts  to  make  all  of  California  as  level  in 
surface  and  as  productive  throughout  its  area  as  the  State  of  Illinois. 
The  rights  of  ownership  in  the  soil,  the  methods  of  its  cultivation,  and 
the  commodities  produced  from  it,  are  widely  different  from  the  Eastern 
States. 

In  1870  the  population  of  California  was  five  hundred  and  sixty  thou- 
sand two  hundred  and  forty-seven;  in  1880,  eight  hundred  and  sixty-four 
thousand  six  hundred  and  ninety-four;  in  1890,  one  million  two  hun- 
dred and  eight  thousand  one  hundred  and  thirty.  The  miles  of  railroad 
in  California  in  1870  were  nine  hundred  and  twenty-five;  in  1880,  two 
thousand  one  hundred  and  ninety-five;  in  1890,  four  thousand  three 
hundred  and  twenty-eight.  Thus,  from  1870  to  1880,  the  increase  in 
population  was  54  per  cent;  in  railroad  mileage,  137  per  cent.  From 
1880  to  1890,  increase  in  population,  40  per  cent;  railroad  mileage,  100 
per  cent.  For  the  two  decades  from  1870  to  1890  the  increase  in  popu- 
lation was  115  per  cent;  in  railroad  mileage,  357  per  cent. 

Other  statistics  bearing  closely  upon  this  subject  will  be  presented  for 
your  consideration  by  Mr.  Richard  Gray,  our  General  Traffic  Manager, 
and  will  show  that,  when  fairly  contrasted  with  other  States,  Califor- 
nians  have  reason  to  congratulate  themselves  on  their  progress,  and  the 
railroads  of  this  State  have  no  reason  to  be  ashamed  of  the  results  of 
their  efforts  to  promote  its  progress. 

After  a  village  existence  of  some  ten  years  as  Fort  Dearborn,  the  birth 
of  Chicago  as  a  town  dates  from  August  4,  1830,  when  it  was  surveyed 


—  i42  — 

as  the  town  of  Chicago,  unci  a  plat  of  the  survey  published  by  James 
Thompson.  In  1870,  forty  years  later,  the  population  had  grown  to 
two  hundred  and  ninety-three  thousand  nine  hundred  and  seventy- 
seven.  The  town  of  San  Francisco,  existing  theretofore  as  a  small 
village,  began  its  existence  as  a  city  in  1849  and  1850.  On  its  fortieth 
birthday,  or  in  1890,  it  numbered  two  hundred  and  ninety-three  thou- 
sand nine  hundred  and  ninety-seven  people,  outranking  Chicago  when 
it  had  reached  the  same  age  by  twenty  inhabitants. 

Taking  into  comparison  with  California  the  so-called  Northern,  Cen- 
tral, and  Northwestern  States,  as  shown  by  the  first  census  taken  in 
those  States  after  their  admission  into  the  Union,  in  comparison  with 
the  census  figures  forty  years  later,  we  find  that,  by  the  census  in  1890, 
forty  years  after  the  first  census,  in  1850,  California  had  increased  its 
population  to  thirteen  times,  while  the  average  of  the  States  of  Illinois, 
Indiana,  Ohio,  Iowa,  Michigan,  and  Wisconsin  was  only  eight  times,  the 
rate  of  increase  in  each  State  being  as  shown  by  the  following  table: 

Illinois,  population  in  first  forty  years  increased - 30  times. 

Ohio,  population  in  first  foi-ty  years  increased - ---  8  times. 

Indiana,  population  in  first  forty  years  increased.. 9  times. 

Iowa,  population  in  first  forty  years  increased --10  times. 

Micliigan,  population  in  first  forty  years  increased - 8  times. 

Wisconsin,  population  in  first  forty  years  increi-sed 5  times. 

It  is  commonly  assumed  that  dense  rural  population  forms  the  basis 
of  real  and  enduring  prosperty  in  any  State.  This  may  or  may  not  be 
true.  Many  facts  can  be  adduced  to  show  that  the  cultivation  of  land 
in  great  ranches  founded  largely  upon  the  Spanish  grants  is,  under  the 
peculiar  climatic  conditions  of  California,  beneficial  rather  than  detri- 
mental to  this  State.  Be  this  as  it  may,  railroad  managers  would  like 
to  see  more  people  settled  in  California,  and  no  inducement  offered,  for 
example,  to  emigrants  who  in  recent  years  have  settled  in  the  State  of 
Washington,  have  exceeded  in  liberality  the  similar  inducements  offered 
by  the  roads  leading  into  California.  In  fact,  the  Washington  roads 
merely  copied  the  rates  previously  offered,  and  duplicated  the  emip:rant 
cars  previously  built  by  the  California  lines.  ■  The  Central  Pacific  Rail- 
road was  the  first  road  in  this  country  to  design  and  build  emigrant 
cars.  People  immigrating  to  the  State  of  Washington,  and  settling 
there,  did  so  merely  because  land  was  plenty,  and  cheap,  for  sale  by  the 
Government  and  the  railroads,  at  not  more  than  $2  50  an  acre.  This 
class  of  people,  generally  without  capital,  did  not  come  to  California, 
because  desirable  land  was  not  offered  so  cheap  here.  Nevertheless, 
there  are  many  people  who  appreciate  the  great  productive  value  of 
lands  in  California,  and  are  coming  to  us  all  the  time;  but  unfortunately, 
this  class  of  people  is  small  as  compared  with  the  immigration  that  is 
attracted  only  by  cheap  lands,  and  consequently  California's  increase 
in  population  is  in  the  very  nature  of  things  comparatively  slow, 
though  all  of  us  who  are  familiar  with  the  capabilities  of  our  wonder- 
ful State  of  California  know  that  in  the  light  of  a  permanent  invest- 
ment, California  lands,  whatever  may  be  their  price,  are  always  cheap 
in  comparison  with  the  lands  of  Oregon  and  Washington. 

There  are  three  classes  of  large  landholders  in  this  State.  First, 
those  who  cultivate  their  own  land,  raising  grain  on  a  large  scale,  plow- 
ing by  steam,  or  with  great  teams  of  animals  propelling  gang  plows, 
turning  over  many  furrows  at  a  time,  and  harvesting  the  grain  with 


—  143  — 

combined  heading  and  thrashing  machines  that  take  the  grain  from  the 
stalk  and  drop  it  into  bags  in  wagons  alongside  or  upon  the  tield  behind; 
thus  doing  nearly  all  the  cultivation  by  machinery,  and  emplo3'ingonly 
a  very  little  labor,  and  that  not  continuously,  but  for  short  periods  at 
seed  time  and  harvest.  This  method  largely  prevails  in  the  Sacra- 
mento Valley,  in  the  north  end  of  the  San  Joaquin  Valley,  and,  to  a 
less  extent,  in  other  localities. 

Another  class  of  large  landholders  rent  out  their  land  to  tenant  farm- 
ers, taking  as  their  rent  a  certain  fixed  proportion  of  the  crop.  These 
farmers  are  generally  able,  independently  of  transportation  companies 
or  all  other  outside  influences,  to  so  adjust  their  rental  as  to  fix  the  con- 
ditions of  living  among  their  tenants.  Many  of  these  landlords  are 
broad  and  liberal-minded  men,  who  see  to  it  that  their  tenants  who  are 
up  to  or  over  the  average  of  men  in  thrift  and  diligence,  reap  their  fair 
share  of  the  rewards  of  industry,  and  consequently  prosper  in  their  work. 
Others  are  said  to  be  more  exacting. 

In  this  connection  I  know  of  a  case,  where  a  railroad  was  built, 
affording  transportation  facilities  to  a  fertile  country,  but  at  such  a 
distance  from  the  markets  that,  up  to  the  time  the  railroad  was  built, 
it  was  merely  used  as  a  cattle  range.  It  is  now  one  of  the  most  pro- 
ductive grain  regions  in  the  State.  The  grain  rates,  when  the  road  was 
first  built,  were  placed  at  figures  then  deemed  to  be  fair.  As  the  grain 
tonnage  increased,  the  rates  were  constantly  lowered.  A  gentleman 
who  owns  one  of  the  largest-  ranches  along  this  line,  who  rent's  his  land 
to  be  farmed  by  tenants,  at  first  took  as  a  rental  one  fifth  of  the  crop.- 
When  the  first  reduction  in  grain  rates  was  made,  he  demanded  and 
received  one  fourth  of  the  crop.  When  the  next  reduction  to  the  exist- 
ing rates  was  effected,  he  demanded  and  now  receives  one  third  of  the 
crop.  Though  large  quantities  of  grain  are  now  produced  along  this 
line,  the  ranches  have  not  been  divided  up,  the  increase  in  population 
has  been  small,  the  growth  of  towns  along  the  line  has  been  slow,  and 
the  railroad  rates  are  now  down  to  bedrock.  This  gentleman,  who  has 
raised  his  rent  as  the  railroad  rates  have  been  reduced,  has  more  than 
once  applied  to  us  to  make  a  further  reduction  in  rates,  because  he  says 
the  homes  of  some  of  his  tenants  lack  the  ordinary  comforts  of  life,  and 
he  is  even  obliged  to  advance  them  money  to  buy  the  prime  necessaries 
in  the  way  of  food. 

While  this  may  be  an  extreme  case,  I  personally  know  of  other  land 
owners  who  raise  their  rent  whenever  a  reduction  in  railroad  rates  can 
be  secured.  This  may  be  only  good  business  policy  on  their  part;  but, 
under  such  circumstances,  the  railroads  must  not  be  blamed  if  an  indus- 
trious and  thrifty  population  of  small  and  independent  land  owners  does 
not  establish  itself  along  every  new  road  built  in  this  State.  Where 
land  is  not  for  sale  at  some  price,  even  though  it  be  a  high  price,  in  small 
tracts  to  suit  the  purchaser,  a  dense  population  of  independent  land  own- 
ers cannot  be  established,  no  matter  how  many  roads  we  build,  or  at 
what  figures  the  rates  for  transportation  are  fixed.  One  of  our  company's 
new  roads  in  the  San  Joaquin  Valley,  built  a  little  over  a  year  ago,  runs 
for  over  fifty  miles  through  the  lands  of  one  firm.  We  hope  and  believe 
that  the  firm  will  construct  irrigation  ditches  or  sink  artesian  wells, 
both  being  feasible,  fitting  the  land  to  be  handled  in  small  tracts,  and 
proceed  to  cut  it  up  and  offer  it  for  sale  at  such  figures  as  will  bring 
people  into  that  region;  but  the  matter  rests  with  the  land  owner,  not 


—  144  — 

with  us,  and  he  will  be  guided  by  his  own  interests.  We  can  only  offer 
him  transportation  at  reasonable  rates  for  anything  that  may  be  pro- 
duced on  his  land. 

In  regions  where  the  annual  rainfall  is  insufficient  to  produce  crop& 
other  than  the  cereals,  and  where,  consequently,  irrigation  is  required— 
and  this  is  true  of  a  greater  portion  of  our  State— the  natural  sequence- 
of  events  is  perhaps  for  the  land  to  be  first  held  in  large  tracts,  in  order 
that  capital  may  be  safe  in  bringing  the  water  from  the  rivers  and 
mountain  streams,  so  that  the  cultivation  of  land  on  a  small  scale  may 
,be  profitable,  even  though  its  price  is  high.  Doubtless  this  is  true,  and, 
*as  I  said  before,  we  have  no  complaint  to  lodge  against^  the  large  land 
owners,  or  others  who  believe  that  they  are  doing  what  is  right  to  build 
up  this  State.  But  these  conditions  do  affect  the  railways,  and  their 
managers  cannot  change  them.  They  must  adapt  their  operations  tO' 
them,  and  only  ask  that  they  be  not  blamed  that,  because  of  the  differ- 
ence in  conditions  which  affect  railways  in  common  with  all  other  inter- 
ests, tb.e  State  of  Cahfornia  is,  in  its  progress  and  development,  different 
from  States  east  of  the  Rocky  Mountains.  I  have  said  that  the  rail- 
roads of  this  State  are  fairly  and  honestly  adjusting  their  operations  to 
the  needs  of  their  patrons.  In  this  connection,  I  desire  to  call  your 
attention  to  some  facts  that,  to  my  mind,  are  of  great  significance  in 
corroboration  of  this  statement. 

The  counties  of  Sacramento,  Solano,  Yolo,  Sutter,  Yuba,  Colusa,  Glenn, 
Butte,  and  Tehama,  covering  the  Sacramento  Valley,  with  navigable 
waterways,  affording  the  most  effectual  protection  against  unreasonable 
railroad  rates  that  can  possibly  be  provided  in  any  countrv,  traversing 
every  one  of  these  counties,  showed  an  increase  in  population  in  IcSQO 
over  1880  of  only  9,438,  or  7  per  cent;  5,778,  or  more  than  half  of  this 
increase,  being  in  the  cities  of  Sacramento  and  Woodland;  leaving  for  the 
rural  population,  including  the  smaller  towns  and  villages,  an  increase  of" 
only  3,571,  or  4  per  cent.  Some  of  the  counties  have  lost  in  popula- 
tion, and  to  some  slight  extent,  this  may  be  due  to  the  fact  that  there 
has  been  a  decadence  in  the  mining  industry  in  those  which  extend  up 
on  the  western  slope  of  the  Sierras.  In  Yuba  County,  for  example,, 
where  the  loss  in  population  in  the  last  ten  years  was  1,648,  330  being  in 
the  city  of  Marysville,  which  is  located  upon  a  navigable  river,  and  in. 
Butte  County,  which  in  the  ten  years  lost  in  population  782  people  (406 
of  the  loss  being  in  the  town  of  Chico,  the  county  seat),  the  fruit 
grower  has  gone  upon  the  foothills  to  replace  the  miner,  and  oranges 
are  already  being  produced  on  a  commercial  scale  in  these  counties. 
The  county  of  Tehama  shows  in  1890,  as  compared  with  1880,  an  increase- 
in  population  of  615  people,  but  this  increase  is  all  in  the  towns,  the 
town  of  Red  Bluff"  alone  showing  an  increase  of  502,  the  village  of  Vina 
129,  and  the  village  of  Corning  210. 

San  Joaquin  County,  one  of  the  most  fertile  in  the  State,  and  perhaps 
in  a  position  to  be  the  most  independent  of  railroads  of  any  county  in 
this  State,  the  San  Joaquin  River,  with  its  tributaries  and  navigable 
sloughs,  offering  transportation  to  market  in  easy  competition  with  the 
railroads  throughout  the  county,  shows  an  increase  in  population,  in 
1890  as  compared  with  1880,  of  4,280  people;  4,142  of  this  increase  is  in- 
the  thriving  manufacturing  city  of  Stockton,  leaving  for  the  country  and 
smaller  towns  an  increase  of  only  138  people  in  ten  years.     The  same- 


—  145  — 

condition  of  things  exists  in  Stanislaus  County,  also  served  by  the  nav- 
igable waters  of  the  San  Joaquin  River. 

Why  is  this  so?  The  explanation  is  simple.  In  these  portions  of 
the  State,  large  ranches,  based  mainly  on  the  original  Spanish  grants, 
exist  and  are  profitably  cultivated  by  their  owners.  Now,  I  am  not  pre- 
pared to  say  that  these  counties  are  less  prosperous  than  they  should  be 
because  of  these  conditions.  But  if  it  be  thought  that  progress  in  popu- 
lation, as  well  as  in  taxable  wealth  and  area  of  land  under  cultivation,  is 
to  be  measured  by  the  mere  increase  in  population,  let  me  point  you  to 
some  portions  of  tlie  State  of  California  that  depend  exclusively  upon 
the  lines  of  the  Southern  Pacific  Company  for  the  transportation  of 
their  products  to  the  general  markets,  to  the  extent  of  requiring  the 
railroads  to  transport  deciduous  fruits  from  2,500  to  3,000  miles  from 
the  point  of  production,  to  be  there  marketed  in  competition  with  iruits 
produced  in  the  immediate  neighborhood.  It  is  to  be  especially  noted 
in  these  cases  that  every  intending  settler  can  in  these  counties  obtain 
land  in  small  holdings  at  some  price.  I  do  not  mean  to  say  that  this 
is  not  true  of  the  other  counties  I  have  mentioned,  but  that  in  these 
counties,  there  was  in  the  beginning  fewer  Spanish  grants — which,  by 
the  way,  in  their  aggregate  area  of  nearly  9,000,000  of  acres,  cover  over 
25  per  cent  of  the  arable  area  in  this  State  (when  we  count  in  as 
"arable"  every  acre  of  desert  and  mountain  side  that  can  prubably  be 
reclaimed) — and  it  has  been  considered  more  profitable  to  work  the 
land  in  small  than  in  large  farms. 

Merced  County,  in  1890  as  compared  with  1880,  shows  an  increase  of 
2,429  people,  or  43  per  cent,  only  600  of  this  being  in  the  towms.  It  ia 
true  that  the  San  Joaquin  River  affords  some  transportation  to  this 
county,  but  in  the  main  it  depends  upon  the  rail  lines.  Fresno  County, 
which  practically  has  no  navigable  waterway  within  its  borders,  shows 
an  increase  in  1890  as  compared  with  1880  of  22,548  people,  or  238  per 
cent;  9,706  of  this  increase  was  in  the  city  of  Fresno,  the  remainder  in 
the  country  and  smaller  towns.  Tulare  County,  depending  entirely  upon 
the  railroad  for  tran  sportation,  shows  an  increase  of  1 3,293,  or  1 1 8  per  cent, 
2,250  being  in  the  town  of  Tulare,  the  remainder  in  the  country  and 
smaller  towns.  Kern  County,  at  the  head  of  the  San  Joaquin  Valley, 
depends  absolutely  upon  the  lines  of  the  Southern  Pacific  Company  for 
the  transportation  of  its  products  to  the  market.  This  county  shows, 
in  1890  as  compared  with  1880,  an  increase  in  population  of  4,207,  or 
75  per  cent;  1,825  of  this  is  in  the  town  of  Bakersfield,  the  remainder 
in  the  country  and  smaller  towns. 

As  will  be  shown  by  the  testimony  of  others,  the  average  railroad 
earnings  throughout  the  State  per  ton  hauled  and  per  passenger  carried 
one  mile  on  the  Southern  Pacific  Company's  lines,  have  been  steadily 
reduced,  and  railroad  construction  continued  from  year  to  year,  both  the 
reduction  in  rates  and  the  extension  of  mileage  being  out  of  proportion 
to  the  increase  in  volume  of  traffic  offered  to  be  carried.  An  arbitrary 
reduction  in  rates  would  bring  the  same  results  as  in  Kansas,  bankrupt 
a  majority  of  the  roads,  and  absolutely  stop  railroad  construction, 
greatly  to  the  detriment  of  the  State. 

Many  people  suppose  that  Mr.  Huntington  has  only  to  ask  for  money 

to  have  it  freely  furnished.     Mr.  Huntington  to  my  certain  knowledge 

has  endeavored  to  obtain  capital   for  large  extensions  of  roads  in  this 

State,  which  bankers  have  been  unwilling  to  furnish.     They  have  been 

10 


—  146  — 

all  over  the  State;  thev  see  these  conditions  which  I  have  attempted 
isriefly  to  describe;  they  see  the  land  holdings;  they  comparethe  con- 
ditions here  with  the  conditions  surrounding  other  States  East  in  which 
they  have  loaned  money;  they  observe  the  differences  here,  and  they 
do  not  understand  them,  and  they  are  cautious  and  conservative. 

Our  railroads  and  their  equipment  are  now  well  maintained,  but 
many  things  beneficial  to  the  public  remain  to  be  done,  such  as  ballasting 
more  of  tlie  track,  the  substitution  of  heavier  steel  rails  for  the  lighter 
in  certain  sections  as  the  latter  wear  out  in  service;  the  construction  of 
masonry  culverts  and  bridge  foundations;  the  substitution  of  iron 
bridges  for  wood;  new  stations  and  depots;  new  side  tracks;  new  and 
improved  cars  and  locomotives;  and  additional  main  tracks  to  convert 
the  roads  into  double  track  lines.  The  money  for  all  these  and  other 
improvements,  all  to  the  advantage  and  safety  of  railway  patrons, 
must  come  from  the  earnings;  there  is  no  other  way  for  us  to  obtain  it; 
and  we  ask  of  you  that  you  will  not,  by  giving  your  sanction  to  the 
measure  presented  for  your  consideration,  deprive  us  of  the  means  to 
maintain  and  improve  our  property  to  proper  and  desirable  standards. 
You  have  been  asked  by  their  owners  not  to  kill  the  little  roads.  We 
respectfully  submit  that  the  Southern  Pacific  System  in  California  is 
made  up  of  lines  originally  built  by  37  independent  companies;  and, 
whatever  advantage  has  accrued  to  the  companies  by  their  consolida- 
tion and  aggregation  of  their  lines  into  one  system,  that  advantage  has 
been  fairly  and  squarely  shared  with  the  public  by  the  furnishing  of 
additional  facilities  and  improved  service.  Do  not,  we  beg  of  you,  kill 
either  the  lines  that  remain  as  little  roads  or  those  which  have,  to  the 
mutual  advantage  of  themselves  and  the  public,  been  combined  with 
each  other  into  a  larger  system. 

Burke:  You  speak,  Mr.  Curtis,  of  two  groups  of  railways  in  the  East, 
and  their  earnings? 

Mr.  Curtis:  Yes,  sir. 

Burke:  And  also  their  operating  expenses;  now,  will  you  be  kind 
enough  to  furnish  us  with  similar  information  about  the  Southern  Pacific 
system  of  consolidated  lines  you  speak  of — of  the  six  consolidated  lines? 

Mr.  Curtis:  That  information,  and  all  that  you  can  desire  in  this 
connection,  will  be  furnished  by  Mr.  Lansing,  our  Secretary  and  Con- 
troller, who  has  all  these  things  at  his  fingers'  ends.  I  have  the  data 
now  in  my  possession,  but  it  will  take  too  much  time,  and  Mr.  Lansing 
can  answer. 

Burke:  I  would  like  to  ask  one  other  question  in  relation  to  your  pay- 
roll, and  the  payrolls  of  these  companies  you  have  spoken  of.  Who  do 
you  include  in  the  payroll? 

Mr.  Curtis:  All  classes  of  employes. 

Burke:  From  the  Superintendent  down? 

Mr.  Curtis:  Down  to  the  track  walkers  and  section  men. 

Burke:  Is  there  a  difference  in  the  rate  of  wages  for  conductors,  engi- 
neers, brakemen,  firemen,  track  walkers,  and  section  men,  as  compared 
with  Eastern  men? 

Mr.  Curtis:  Yes,  sir.  The  firemen,  for  instance — I  have  before  me 
comparative  statements  of  wages  paid  on  the  principal  roads  in  Illinois, 
and  upon  the  Southern  Pacific  Company's  Pacific  System  in  California. 
Firemen  with  us  earn  an  average  of  $3  40  per  day.  In  Illinois,  the 
rate  is  from  $2  01  to  $2  07  per  day.     You  ask  about  conductors:  With 


—  147 


us  their  average  wages  are  $4  11  per  clay;  in  Illinois  it  runs,  on  the 
Illinois  Central  and  the  Atchison  System,  two  prominent  roads  which 
I  have  taken,  from  $3  11  to  $3  42,  against  our  $4  11.  These  figures 
are  from  the  Railroad  and  Warehouse  Commissioners'  Reports  of 
Illinois,  on  the  one  hand,  and  our  people's  reports  on  the  other. 

You  ask  about  trackmen.  Section  foremen  in  the  East  earn  from 
$1  48  to  $1  80  per  day.  Our  section  foremen  earn  an  average  of  $2  74 
per  day.  Other  trackmen,  that  means  section  hands,  or  the  laborers,  in 
Illinois  earn  from  $1   16  to  $1  28;  while  our  section  men  earn  $1  61. 

I  will  place  this  table,  if  you  desire,  with  the  report  filed  with  the 
clerk. 

EXHIBIT  "A." 


Comparative  Wages  Paid  on  Principal  Roads  in  Illinois  and  California.    Averag 
sation  per  Employe  per  Day  {SIS  Working  Bays  to  Year). 

e  Compen- 

In  California. 

In  Illinois. 

Southern 
Pacific  Co. 

S.  F.  &  N. 
P.  Ry. 

Atchison. 

Illinois 
Central. 

■General  officers    .  _.      .  .  

$14  10 

$16  02 

10  50 

11  02 
11  50 

6  60 

3  42 

4  36 
2  48 
2  16 
4  04 

2  02 

3  67 
2  29 

2  88 

3  36 
2  67 

4  28 
2  32 

1  76 

2  33 

3  26 
2  51 

2  25 

3  43 

$9  04 

$12  45 

Superintendent 

Attorney.- 

Chief  Engineer .J. 

Master  Mechanic. 

General  office  clerks 

3  47 

2  59 

2  37 

Soliciting  agents .     

Station  agents 

2  59 
2  44 
4  32 
2  40 
4  11 

2  91 

3  34 
3  15 
2  31 

1  80 

1  59 
3  98 

2  01 

3  42 

1  93 

2  50 
2  18 
1  66 

1  82 

Other  station  men 

1  85 

Enginemen 

3  74 

Firemen 

2  07 

Conductors    

3  11 

Other  trainmen 

2  15 

Machinists.  .«. 

2  33 

Carpenters 

2  21 

Other  shopmen 

1  56 

Roadmaster 

Section  foremen .. .     ..  .. . 

2  74 

1  61 

2  86 

3  26 

2  77 

3  59 

1  48 

1  16 

2  06 
1  72 

1  80 

Other  trackmen 

1  28 

Switchmen,  flagmen,  and  watchmen 

2  03 

Telegraph  operators  and  dispatchers . 

1  75 

Employes  floating  equipment.. 

2  83 

All  other  employes  and  laborers 

Storekeeper ... 

2  47 

2  05 

Average 

$2  59 

$2  68 

$1  66 

$1  98 

—  148  — 


O  1-1 


(!■ 

-f 

m 

rx) 

X 

"-I 

H 

o 

H 

OM 

to 

0) 

y^ 

y 

1 

VH    <*     r^ 
B    2    =" 


■  .CO  ^  35  w  M 

-  ^^  O  io  >0  O 


OiO  r-  vo  lO  ffi 

c- ic  :o  03  r^  00 

0'_j  ^  ^  ^  r-( 


C5  00  30  IM  5B 


03  oc 


3  CO 


^^  dice  y*  "O 
c5  cf  cc'cc-cc'co 


lO  CO 

CO  C3_ 

CO  c^f 


cS  c3 
c-)_r 

CI     Q 


H  fa  G 

5  "  2 
??  t-  s 


I— I 
1— I 


^ , .  t^  o 

^  C-1  O  CC  ^"^^ 
O  C--  O  00  ~  o 

°°  5l  TT-  t-_t-^CO_^ 


03  00  O  O  I-- 
F-  Tf  GO  <N  CI 

^  ■^  CO  -*  l~  ^ 

°^  CO  (M  O  C-1_0_ 

fLco" '.o"  t--^  f- co" 


^^i-H  lO 


<1 


•M  CO 

w  --0 

oc  to 

CO  CO 

-3-00 

CO  —1 

UO  IM 

■q  o 


?.=     cc- 


—     ^  QJ    Q 


HP4     ;?i^     O 


—  149  — 


H  Q  <B 


K  H  ^ 


«  M  O 

C     f^     r^ 


a.  !-  ;^-^ 

^  x^  o 

^  H  Pm  c3 

H  2  03 

^  -  5 

<!  tn  •< 

K  1-1  "^  Oh 

K  Z  q  g 

►-  03  K  o 

J  J  O 

r  ^  w 


HS 


fc,  »;^ 


S    PH     !»    W 

*-"  .^  ^,  r^ 


7j  o  H 


f^  K  H  Oi 

;  cs  ^  o  tH 

<  "  P  g  <u 

!  d  ^  H  ^ 


<  «  W  HO 

S  t^  E  *  " 

(^a3x-«-2 

^^  o  K  ^  O 

a.  § « ?.s 


tK    -«1    O 

P  Z  « 
a  <  o 


>  «  K  «  g 

;  ^  w  -<  o 

;  2  « f^'o 

:  ^  fc.^  c3 

5  O  o  OJ  O 

H  "-^  «  !- 

Q  o  la  c3 

2  3  ►J  a> 


9H  h^l  «" 
O    CQ   -< 


03 


c  >-< 

>H  t.  (D 

=3  S  Q, 

W  P.O 


r5po3 


1^  P.3'-' 


O  -♦<  lO  10  O  O  O  CO  O  O  05 
C-Jt^t^OlOI^CCOC^i-ICO 

ci-HrH        (M  ^  iH  tH  .-(  iH  (M 


iioO'-iooioysaico-^t^ 
.  ^j  -^  CO  ic  t--^oc_co  -H  -f  o; 
"  cc"  o' ic"  cc"  o  cd~  r-^  c-f  c-f 


r-'M 


CO  ^. 


c-f  ro' t-^-H"  cT  co"  i--^  lo"  1— " 


SciojioomcoTtii-icoio 
^incow'ioccio^Hoooo 

O  C-l  — ^  O  »  CC  iC  ^  X"  -r  CO 
.-05  OO^i-HCOiMODOCD-H 


inj 


Vi- 


IM 


M- 


H  "O 


;OCDlO^-t<I^COCCCO(M 
lO  m  -H  lO  o  o 


■CTj^Dt^^— l-t<CO-*rt<TH 


30   ,-T.j    _ 

<0CCC.T0  02-^l~^Od2»^ 
V  C-1  lO  CO  30  C-l  — I  (M  O  Ol  O 

§  M'"co"T-r     — "c^Tc^f  cd'i-h'" 


32a2>-ICO\Ot^^OO(M0500 

—  iMOlCOCOCOCOCDCXO 

tjc-icDt^ooccom— 't^ 

^  .-I  T-l  .-I  tH  i-H  rt 


5l,— ICOCOCOt^COT-ICDCO-* 

o;ic-r-ioi-<!t<i-Hcoa3coco 
_•  :o  ■^  <M  O  '>:,'*  M  ^  co_oo 

o  (M"<xrco~r-rco~oi~o'"<M'~c«o~'-r 

O,— iCOOOCOOOiM-rfOit^Oi 
-C'  CD'— l-^CO'^tC3X't^CO 

^  co"ic  c4~     .-TTirco'ofi-r 


2a2co>iciococoinc)o-*cD 

.  I--  O  UO  XI  — ■  i-l  t^  C>5  W  lO 
O  -+■  -jj  C-i  O  C-1  CD  C-i  lO  CO  CD 
„'  32  ■»  O  CO  l-^  CO  CO  OC  lO  lO 
g3  !M  lO  C-J    ,-1  <M  TT  c-1  ^ 

.  i-T 

ft 


>>.-; 


c:  >  O 

^    C3'>v 


^?^ 


C  rt  2 


03  s^.-rscs  c3 


c3 
god 

a !-  o 
g:^0 


rt 


C  c3  S-S 
1  vj  y  ,-  r^  TJ  'o  "43 

I'O  Cr--    S    C    Ci 

I  g  S  0/  ;:i  oS^rf  c 
1  03  3  "^  5  — ""^  S 

■  ^-  5  c3  3  ^  "^  'C 
1  d"  c  o  o  o"  d"  S 

i  b£'  bD  iC  ojj  b£  bcii 

^  c3  c3  Cj  c3  c3  c3  q; 

O   Cj   CJ   CJ   Cj    o   > 

5o55So5 


■"'  03 
03  O 


d  2"3 


S  3  c 

~^  hS^  '^  "- 


(D 


€«■ 


O  c3  fH 

t>  O  O 

."  c3 

co'^  _ 

oo  o  S 

1^  -^^  -vi 

P-.  O  C3 


Ox  c3 


^  t- 

Oi^ 

CO  o 

o  o 

CD  'CO 

I^(M 

CO  CO 

COCO 

=«• 

bJ3 


—  CO  Q 
ECO 

o„_      .  . 

^  03  03  »  O 
cS  G  O^jj 

"  O  "  9  S 

-="•42  a;  ^  OJ 


!«3 


;=;     ^ 


'os 


tn.!3 


Ph      OPh 


o 


—  150  — 
Statement,  of  Richard  Gray. 

(General  Traffic  Manager  of  the  Southern  Pacific  Company.) 

The  distinguished  Senator  who  introduced  the  bill  now  before  your 
honorable  committee,  which  was  framed  by  the  San  Francisco  Traffic 
Association,  on  further  consideration  withdrew  his  proposition  for  2 
cents  per  mile  as  maximum  passenger  fares,  stating  that  he  had  been 
informed  that  3  cents  per  mile  was  the  rate  charged  by  a  large  number 
of  the  principal  roads  in  the  United  States,  and  was  therefore  willing 
that  3  cents  be  fixed  as  the  maximum. 

It  has  been  shown  that  the  Act  of  the  Legislature  under  which  the 
Nevada  County  Narrow  Gauge  road  was  organized  allows  a  charge  of 
10  cents  per  mile  for  passengers,  and  20  cents  per  ton  per  mile  for  freight. 

So  anxious  was  the  community  to  secure  this  road,  that  the  Legisla- 
ture agreed  not  to  interfere  with  its  rates  until  after  it  had  been  shown 
that  tiie  road  earned  more  than  12  per  cent  per  annum  on  the  invest- 
ment. 

If  10  cents  per  mile  is  considered  reasonable  for  the  line  from  Colfax 
to  Nevada  City,  which,  while  having  steep  grades,  is  practically  below 
the  snow  line,  surely  5  cents  per  mile  is  reasonable  for  the  line  from 
Auburn  to  Truckee,  with  its  heavy  grades,  numerous  tunnels,  and  con- 
tinuous snow  galleries  for  thirty-eight  miles. 

If  3  cents  per  mile  be  reasonable  and  the  average  fare  charged,  as 
we  were  told,  on  the  great  railroads  of  the  Western  States,  connecting 
large  centers  of  population  in  such  States  as  Illinois,  Iowa,  and  Nebraska, 
will  any  one  contend  that  5  cents  per  mile  is  extravagant  on  the  Colo- 
rado Desert,  between  Banning  and  Yuma,  where  the  road  is  subject  to 
periodical  inundations  from  the  Colorado  River,  numerous  cloudbursts, 
which  make  it  very  difficult  to  maintain  a  roadbed,  and  where  there  is 
no  local  traffic  of  any  kind,  and  which,  for  all  business  purposes,  might 
as  well  be  a  bridge  or  a  tunnel? 

If  three  cents  per  mile  be  reasonable  and  the  customary  charge 
between  centers  of  population  in  Eastern  States,  will  any  one  contend 
that  4  cents  per  mile  is  an  extravagant  rate  between  Redding  and 
the  Oregon  boundary,  through  the  tortuous  Sacramento  River  Canon, 
and  over  the  Siskiyou  rangeof  mountains,  with  maximum  grades  of  one 
hundred  and  seventy-four  feet  to  the  mile?  Or  that  4  cents  per  mile  is 
unreasonable  between  Baker sfield  and  Saugus,  over  the  Tehachapi  range 
of  mountains,  and  the  Mojave  Desert? 

I  think  you  will  admit,  gentlemen,  that  difi'erent  circumstances  and 
conditions  prevail  in  this  State  from  other  States;  that  variety  and  not 
uniformity  is  the  rule,  and  particularly  is  this  the  case  with  railroads, 
in  their  operations  as  well  as  their  construction;  that  the  proposed 
uniform  rate  per  mile,  regardless  of  character  of  road,  would  be  unjust 
in  the  extreme  to  mountain  roads  and  roads  in  desert  or  thinly  settled 
districts. 

Since  coming  before  your  honorable  committee,  the  framers  of  this 
bill  have  learned  that  2  cents  per  mile,  as  originally  proposed,  was 
unreasonable,  and  have  admitted  this  fact.  Would  it  not  be  well  for 
them  to  again  investigate,  when  they  will  doubtless  find  that  3 
cents,  which  is  the  maximum  charge  on  the  Southern  Pacific  lines 
through  the  great  valleys  of  the  State,  is  also  an  unreasonable  rate  to 
apply  to  mountain  and  desert  districts  of  California;   that  such  a  rate 


—  151  — 

adopted  as  the  maximum  would  be  unjust,  and  sure  to  cripple  small 
roads  and  branch  lines  now  in  existence,  while  effectually  preventing 
the  building  of  new  roads  in  the  future? 

In  view  of  the  evidence  already  presented  on  the  subject,  I  think  it 
would  be  insulting  the  intelligence  of  this  committee  to  dilate  further 
on  this  point.  The  facts  as  to  our  passenger  rates,  to  which  we  invite 
the  investigation  and  criticism  of  all  fair-minded  men,  speak  for  them- 
selves. 

The  Manager  of  the  San  Francisco  Traffic  Association,  in  his  hearing 
before  this  committee  on  the  evening  of  January  23d,  argued  in  favor  of 
a  constitutional  amendment  embodying  a  distance  tariff  and  classifica- 
tion to  apply  on  freight,  which  he  would  have  put  in  force  on  the  rail- 
roads of  this  State. 

Mr.  Leeds  has  repeatedly  compared  our  rates  with  those  in  force  in 
Kansas,  which  seems  to  be  his  favorite  State;  but  I  notice  that  in  con- 
structing a  distance  tariff  which  he  would  have  adopted  for  California, 
he  does  not  use  the  official  Kansas  Distance  Tariff,  but  rates  very  much 
lower.  We  have  not  had  time  since  receipt  of  copies  of  this  bill  to 
apply  the  new  tariff  to  our  business,  or  judge  accurately  of  its  effects 
thereon.  But  I  can  assure  your  committee  that  the  rates  proposed  would 
be  disastrous  in  the  extreme. 

It  is  proposed  to  ingraft  in  the  Constitution  of  the  State,  to  govern 
this  tariff,  a  classification  which  is  made  by  Eastern  people  to  apply  on 
Eastern  roads,  whose  conditions  and  circumstances  differ  widely  from 
those  in  California. 

The  proposed  rates  can  be  shown  to  be  lower  than  those  now  used  on 
any  road  on  the  Pacific  Coast,  or  on  any  road  similarly  situated  as  to 
grades,  cost  of  construction,  or  any  of  the  elements  which  enter  into  the 
expense  of  maintenance  and  repairs. 

The  Manager  of  the  Traffic  Association  has  made  certain  statements 
which  have  been,  or  will  be  answered  by  other  officers  of  the  company; 
but  there  is  one  statement  or  allusion  which  has  been  reiterated  in  cer- 
tain San  Francisco  newspapers  to  which  I  will  refer,  which  I  think 
was  altogether  uncalled  for.  He,  Mr.  Leeds,  reminds  your  honorable 
committee  you  are  considering  rates,  which,  as  he  understands  them, 
apply  to  roads  which  are  within  the  limits  of  California  alone;  that  it 
has  been  insisted. that  the  Pacific  System  of  the  Southern  Pacific  Com- 
pany should  be  considered  as  a  whole,  including  Arizona,  Oregon,  and 
other  States.  He  tells  you  the  Supreme  Court  of  the  United  States  has 
held  that  each  State  is  an  integral  part  by  itself,  and  as  such  the  utate 
has  power  to  fix  rates  on  all  State  business;  that  you  must  not  call  on 
California  to  support  a  business  in  other  States  or  Territories. 

These  strictures  are  altogether  unnecessary,  because,  while  it  might 
justly  do  so,  the  Southern  Pacific  Company  has  never  asked  California 
to  support  roads  in  another  State  or  Territory.  Facts  indicate  the 
reverse.  Our  printed  annual  reports  will  prove  that  our  lines  through 
Nevada,  Utah,  Arizona,  and  New  Mexico,  are  self-sustaining.  On  the 
other  hand,  our  lines  in  the  States  and  Territories  referred  to,  are  feeders 
of  the  California  line,  bringing  to  it  business  which  it  would  not  otherwise 
receive,  and  but  for  which  it  would  not  be  able  to  operate  as  econom- 
|ically  for,  or  furnish  as  good  train  facilities  to,  the  citizens  of  this  State. 

Were  the  California  roads  not  connected  with  the  East,  their  earning 
[power  would  be  very  much  diminished,  as  can  be  readily  shown  to  any 


—  152  — 

one  who  will  take  the  trouble  to  look  into  the  matter.  A  little  thought 
on  the  subiect  will  readilv  convince  any  investigator  that  the  States  are 
interdependent— that  no  State  is,  as  Mr.  Leeds  puts  it,  "  an  integral  part 
bv  itself,"  or  can  atford  to  be  so— least  of  all,  California.  Up  to  the 
close  of  1869,  California  might  be  called  an  integer,  because  it  had  no 
direct  communication  with  the  rest  of  the  country;  but  was  it  happy  or 
prosperous  in  that  condition?  We  know  it  w^as  not.  But  California 
now  has  railroads,  and  the  principal  of  these  is  on  trial.  We  are  told 
that  it  has  oppressed  and  is  oppressing  the  citizens  of  the  State,  who  are 
now  seeking  relief.  Let  us  see.  The  old  adage  is  a  true  one:  "  By  their 
fruits  ve  shall  know  them." 

The'Manager  of  the  San  Francisco  Traffic  Association  has  repeatedly 
stated  that  he  looks  with  suspicion  on  railroad  figures;  that  his  expe- 
rience leads  him  to  be  dubious  of  them;  but  I  do  not  think  he  can 
accuse  the  United  States  Census  of  being  partial,  or  made  up  to  favor 
any  particular  interest.  It  may  therefore  be  well  to  make  a  few  com- 
parisons from  the  Census  by  way  of  illustration: 

California  had  in  1870,  the  first  year  in  which  the  overland  railroad 
was  in  operation,  real  estate  valued  at  $169,536,546;  with  a  population 
of  560,000;  that  being  $303  per  capita. 

This  was  her  population  and  development  after  twenty  years  of 
Statehood,  including  a  gold  excitement  and  production  such  as  the  world 
has  never  seen. 

In  1880,  with  mining  values  steadil}'  decreasing,  the  valuation  of  real 
estate  had  increased  to  $491,885,079;  and  her  population  to  864,000; 
being  $569  per  capita. 

An  increase  of  $322,848,533  in  ten  years,  or  nearly  three  times. 

In  1890,  her  real  estate  was  valued  at  $930,822,650;  her  population 
had  increased  to  1,208,000;  being  $770  per  capita. 

Being  an  increase  of  over  $761,000,000,  or  $467  per  capita,  or  nearly 
five  times  in  twenty  years. 

Now  let  us  glance  at  Kansas,  with  which  State  we  have  been  fre- 
quently compared  for  several  months  past: 

Census  Bulletin  No.  104,  issued  August  22,  1891,  gives  valuation  for 
1890  of  Kansas,  including  personal  property,  as  $290,593,711;  being 
$203  68  per  capita;  while  the  valuation  of  California,  including  per- 
sonal property,  was  $1,071,102,327,  or  $886  per  capita. 

Thus  the  wealth  of  the  people  of  California  is  4.36  times  as  great  per 
cajnta  as  the  people  of  the  State  with  which  Mr.  Leeds  would  com- 
pare us. 

The  total  valuation  of  Kansas  in  1880  was  $160,891,000;  which  in 
1890  had  increased  to  $290,293,000;  or  an  mcrease  of  $129,402,000. 

With  which  compare  California  in  1880,  $584,578,000;  and  in  1890, 
$1,071,102,000;  or  an  increase  of  $486,524,000. 

The  Census  of  1890  shows  Kansas  had  9,000  miles  of  railroad  within 
her  borders,  while  California  had  but  4,336  miles,  or  less  than  half  as 
much;  but  we  find  in  twenty  years,  the  enormous  sum  of  $761,000,000 
added  to  the  taxable  value  of  real  estate  in  California,  not  to  mention 
an  increase  of  over  $60,000,000  in  her  personal  property,  all  of  which  Ij| 
maintain  is  directly  traceable  to  the  construction  and  operation  of  rail-' 
roads,  which  give  her  communication  and  direct  connection  with  65,000,- 
000  people  on  the  eastern  side  of  the  continent. 

To  one  not  famihar  with  the  facts,  or  hearing  them  for  the  first  time, 


—  153  — 

this  may  sound  like  a  startling  claim;  but  we  need  only  refer  to  the 
recently  published  reports  of  the  California  State  Board  of  Trade  to 
prove  the  truth  of  our  assertion.  Since  the  decadence  of  gold  mining 
and  previous  to  the  construction  of  transcontinental  roads,  and  the 
development  brought  about  thereby,  California  was  essentially  a  pastoral 
and  wheat-growing  State;  her  average  yield  of  wheat  ranging  from 
fifteen  to  twenty  million  centals,  most  of  which,  as  at  present,  reached 
tidewater  on  the  bay  of  San  Francisco. 

General  N.  P.  Chipman,  in  his  address  before  the  State  Horticultural 
Convention,  at  San  Jose,  November  15,  1892,  states  that  in  the  year 
1890,  the  value  of  fruit  and  fruit  products  exceeded  by  over  half  a 
million  dollars,  the  value  of  wheat  and  Hour  exported  within  the  year. 
In  1880  he  says  the  export  of  fruit  may  be  said  to  have  commenced,  and 
yet,  "in  ten  years,  we  added  twenty  million  dollars  annually  to  the 
wealth  of  this  State,  without  diminishing  the  possibilities  of  wheat 
growing  by  so  much  as  a  bushel."  Still  quoting  from  the  same  report, 
we  find  that  in  1891,  a  comparatively  small  acreage  in  Southern  Cali- 
fornia received  $1,796,000  for  oranges  alone,  and  this  will  be  very 
largely  increased  the  present  year.  Riverside,  he  says,  shipped  fifteen 
carloads  in  the  winter  of  1880-81,  and  in  1889-90  shipped  one  thousand 
five  hundred  carloads.  And  I  would  saj-  right  here,  while  not  abating 
a  jot  from  the  debt  we  owe  our  Santa  Fe  friends,  it  should  be  borne  m 
mind  that  the  Santa  Fe  was  not  completed  to  San  Bernardino  until 
1886,  and  did  not  have  its  own  line  into  Los  Angeles  until  June,  1887; 
therefore,  the  wonderful  development  about  which  we  have  been  talking 
was  due  to  the  Central  Pacific  and  Southern  Pacific,  who  created  it  and  fos- 
tered it.  In  1870  shipments  of  deciduous  fruits,  mainly  from  the  central 
portion  of  the  State,  were  only  about  four  million  pounds.  In  1880  these 
were  quadrupled,  being  sixteen  million  pounds.  This  latter  in  1891  was 
increased  over  five  times,  aggregating  eighty-three  million  pounds;  while 
in  1892,  shipments  exceeded  one  hundred  million  pounds.  Still  quoting 
the  same  report,  we  find  in  1880,  Fresno  County  had  less  than  ten  thou- 
sand population;  in  1890  it  was  over  thirty-two  thousand.  Fresno  is  the 
•center  of  the  raisin  industry,  which  previous  to  1873,  may  be  said  to 
have  had  no  existence.  In  1880  her  shipments  were  less  than  two 
million  pounds, and  in  1891  had  increased  to  over  twent3-seven  million 
pounds.  What  is  said  of  Fresno  County,  may  be  said  of  Santa  Clara, 
Kern,  Butte,  Tehama,  and  other  counties,  as  well  as  Los  Angeles  and 
San  Bernardino. 

It  is  needless  to  say  that  this  wonderful  development  of  our  fruit  cul- 
ture would  have  been  impossible  without  the  overland  roads,  as  well  as 
the  local  system  within  the  State.  Without  cheap  and  rapid  transpor- 
tation, the  business  would  not  have  been  possible,  and  the  State  could 
not  have  attained  anything  like  her  present  degree  of  prosperity,  to  sav 
nothing  of  the  great  and  brilliant  future  which  awaits  her. 

But,  it  may  be  suggested,  it  is  not  through,  but  local  rates,  which  are 
under  consideration.  My  answer  is,  the  revenue  from  starting  point  to 
State  line  is  a  local  earning,  and  this  charge  is,  on  all  the  staple  prod- 
ucts of  California,  the  lowest  rail  transportation  in  the  world. 

Even  under  rates  established  by  the  defunct  Transcontinental  Asso- 
ciation, that  great  bugbear  of  the  San  Francisco  Traffic  Association, 
rates  on  the  principal  products  of  California,  which  while  intrinsically 
niuch  more  valuable  than  wheat,  were,  to  enable  them  to  reach  the 


—  154  — 

great  centers  of  population  at  the  East,  transported  at  rates  which  wer& 
lower  per  mile  than  rates  on  wheat  from  points  in  the  Dakotas  and 
other  Western  States  to  Milwaukee  or  Chicago. 

I  maintain  it  makes  no  material  difference  to  the  farmer  or  consumer 
what  rates  he  is  asked  to  pay  from  San  Francisco  to  the  interior  on  his 
tobacco,  tea,  whisky,  and  other  luxuries;  that  it  makes  no  difference 
whether  these  articles  are  jobbed  by  a  merchant  living  in  San  Fran- 
cisco, Los  Angeles,  Sacramento,  or  elsewhere,  so  long  as  the  rates  on 
staple  products  of  his  orchard  and  vineyard  are  low  enough  to  enable 
him  to  compete  with  and  lay  his  fruit  down  in  competition  with  similar 
products  of  the  Eastern  States  and  of  Europe. 

What  is  true  of  green  fruit  is  also  true  of  raisins,  canned  fruit, 
and  other  commodities,  which  it  is  possible  to  ship  by  water,  but  which, 
to  be  profitably  marketed,  must  reach  promptly  and  in  good  season  all 
the  great  cities  East,  South,  and  West,  in  much  shorter  time  than  they 
could  be  transported  by  the  most  rapid  water  communication. 

That  the  State  has  prospered  since  the  advent  of  the  transcontinental 
railroad,  the  above  figures,  showing  $761,000,000  increase  in  land 
values,  proves  beyond  question.  Railroad  construction  in  some  parts 
of  the  State  has  kept  pace  with,  as  well  as  promoted,  this  development. 
Will  any  fair-minded  man  demand  that  the  instruments  of  all  this  pros- 
perity shall  not  have  a  fair  share  of  the  same? 

There  are  yet  several  counties  of  this  State,  notably  Lake  and  Hum- 
boldt, anxiously  crying  out  for  railroads,  and  demanding  railroad  con- 
nection with  the  rest  of  the  State.  Any  one  visiting  the  fair  now  in 
progress  in  San  Francisco,  will  find  the  Humboldt  County  exhibit,, 
which  is  one  of  the  most  interesting  in  the  Pavilion,  displaying  sun- 
dried  prunes  and  other  valuable  products.  He  will  also  find  a  sign  con- 
spicuously displayed  reading  as  follows: 

"  Humboldt  has  one  hundred  and  twenty  miles  of  railroad,  and  yet 
there  is  not  enterprise  enough  in  the  State  of  California  to  give  this 
great  county  railroad  communication  with  the  outside  world." 

I  will  call  the  attention  of  Mr.  Leeds  and  the  Traffic  Association  of 
San  Francisco  to  this  sign.     It  is  a  standing  reproach  to  them. 

It  is  safe  to  assume  that  within  a  year  from  the  construction  of  a  rail- 
road into  Lake  and  Humboldt,  the  taxable  value  of  land  in  those  coun- 
ties would  have  increased  at  least  100  per  cent.  But  what  is  this 
"Traffic  Association?"     Let  us  look  into  it  a  little. 

I  maintain  it  is  not,  as  its  title  would  indicate,  a  traffic  association  of 
"California."  I  have  it  on  the  authority  of  a  gentleman  who  helped 
to  organize  it,  that  ninety-eight  per  cent  of  its  members  reside  in  San 
Francisco;  the  other  two  per  cent  consists  of  citizens  of  other  parts  of 
the  State,  whose  names  were  put  on  for  etlect,  who  take  no  interest  in 
its  proceedings,  and  contribute  nothing  to  its  revenues. 

These  San  Francisco  merchants,  during  a  period  of  dull  trade,  and 
looking  around  for  some  means  of  bettering  the  situation,  imported 
from  the  East  a  gentleman  whose  name  came  before  the  country  in 
connection  with  the  Transcontinental  Association,  and  they  put  him 
in  charge  of  their  association.  This  gentleman  immediately,  from  his 
office  in  San  Francisco,  began  to  "reform"  matters,  and  in  one  of  his 
public  speeches  at  a  dinner  of  the  Chamber  of  Commerce,  announced 
what  he  no  doubt  in  his  freshness  candidly  believed,  that  the  State  was 
languishing  under  what  he  was  pleased  to  term  "Your  one  Railroad." 


—  155  — 

I  am  glad  my  friend  Leeds  has  come  to  Sacramento,  because  he  has 
certainly  learned  since  coming  that  instead  of  one  railroad,  there  are 
more  than  thirt}^  railroads  in  the  State.  He  has  learned  something  of 
the  greatness  of  California;  that  tliere  are  mountain  roads  as  well  as 
valley  roads;  that  there  are  circumstances  under  which  one  road  may 
live  and  earn  fair  interest  on  its  investment,  while  other  roads  languish 
and  starve;  that  no  uniform  distance  tariff  can  be  just  or  reasonable, 
as  applying  to  all  roads  in  this  State;  and  what  is  true  of  all  roads 
must  be  true  of  roads  forming  parts  of  a  system  of  roads;  that 
while  his  favorite  State  of  Kansas  has  nine  thousand  miles  of  railroad, 
much  of  which  is  bankrupt,  California  has  as  yet  but  half  that  mile- 
age, though  with  double  the  area.  He  has  learned,  I  hope,  that  the 
crying  need  of  California  is  "more  railroads;"  that  railroads  have  been 
the  cause  of  her  present  prosperity  and  are  indispensable  to  her  further 
development;  that,  if  instead  of  pulling  down  and  trying  to  cripple 
railroads  now  existing  in  the  State,  which  have  done  so  much  for  the 
State,  the  San  Francisco  Traffic  Association  would  inaugurate  and 
encourage  railroads  to  Humboldt,  to  Lake,  to  Del  Norte,  to  Lassen,  to 
Modoc,  and  to  other  counties  holding  out  their  hands  and  seeking  rail- 
road communication,  they  would  accomplish  far  more  for  the  State  and 
for  San  Francisco  than  by  any  amount  of  rancor  and  defamation  of  the 
men  who  have  invested  their  own  capital  and  that  which  they  have 
been  able  to  borrow,  for  the  building  of  railroads  and  development  of 
the  country. 

San  Francisco  has  no  real  quarrel  with  the  Southern  Pacific  Company, 
and  should  have  none.  Individual  members  of  this  company  are 
among  her  leading  and  most  public-spirited  citizens,  who  have  done 
their  part  towards  building  up  the  city;  self-interest  alone  would  lead 
the  Southern  Pacific  Company  to  cultivate  the  most  friendly  relations 
with  San  Francisco  and  her  citizens.  While  endeavoring  to  maintain 
such  relations,  the  company  cannot  discriminate  to  the  detriment  of 
growing  inland  cities,  but,  nevertheless,  has  enabled  San  Francisco,  so 
far  as  it  could  consistently  with  the  interests  of  the  other  localities  it 
serves,  to  distribute  merchandise  to  remote  interior  points  in  competition 
with  like  merchandise  from  Eastern  cities.  In  short,  the  Southern 
Pacific  Company  does  not  now,  and  never  has  sought  to  deprive  San 
Francisco  of  any  of  the  commercial  advantages  which  naturally  should 
come  to  her  by  reason  of  her  location  on  the  sea. 

But  I  maintain  this  complaint  of  the  city  which  has  had  a  portion 
of  its  trade  curtailed  by  natural  causes,  and  by  the  building  of  compet- 
ing lines  of  railroads  to  the  north  of  us  and  on  the  south,  is  not  an 
index  to  the  true  situation,  but  is  a  libel  on  the  State,  which,  if  allowed 
to  pass  unchallenged,  may  do  it  serious  injury. 

My  duties  require  me  to  make  frequent  visits  to  the  Eastern  States,  and 
I  can  say  from  personal  observation  that  California  is  to-day  the  most 
prosperous  State  in  the  Union,  and  her  development  is,  and  has  been 
steadier,  her  wealth  greater,  her  happiness  and  prosperity  better  assured 
than  any  other  State;  and  if  our  San  Francisco  friends  would  devote 
some  of  the  two  hundred  million  dollars  lying  idle  in  her  banks,  or 
loaned  only  at  low  rates  of  interest  on  city  real  estate,  for  the  develop- 
ment of  railroad,  irrigation,  and  kindred  enterprises,  we  would  have 
such  a  season  of  prosperity  as  would  leave  in  the  shade  the  famous 
"boom"  in  the  southern   counties.     San   Francisco  would  see  her  trade 


—  156  — 

revive,  and  would  be  too  busy  attending  to  her  legitimate  business  to 
send  a  Traffic  Manager  to  Sacramento  with  a  proposition  to  insert  in  our 
organic  law  a  sclieme  of  rates  and  classification  which,  to  put  it  mildly, 
is  absurd  and  ridiculous,  and  which  even  the  distinguished  Senator  who 
presented  it,  ai)ologizes  for  as  an  "innovation." 

This  enormous  increase  of  $761,000,000,  a  sum  nearly  three  times  the 
total  wealth  of  Kansas,  speaks  louder  than  any  words  of  mine.  It 
places  the  burden  of  proof  on  those  who,  in  their  ignorance  and  short- 
sightedness, defame  and  belittle  our  fair  State. 

I  respectfully  submit,  no  evidence  has  been  produced  to  show  affirma- 
tively why  there  is  any  necessity  for  reducing  or  in  any  way  changing 
the  existing  railway  rates  of  this  State.  No  representative  of  any 
industry  has  appeared  before  you  to  complain,  or  produced  any  evi- 
dence tending  to  show  that  the  railroads  of  this  State  have  not  in  the 
past  occupied,  and  are  not  now  occupying,  their  true  and  proper  place 
in  the  industrial  development  of  the  Commonwealth;  that  they  are  not 
now  doing  all  that  the  State  has  power  to  compel;  that  the  growth  of 
California,  the  development  of  its  agricultural,  mineral,  or  industrial 
resources  are  being  in  any  manner  restricted  or  impeded  by  acts  of 
transportation  companies. 

No  representative  of  any  industrial  interest  has  appeared  before  you 
to  make  a  showing  of  this  character,  for  the  simple  reason  that  no  good 
cause  for  complaint  against  the  rates  or  methods  of  the  raiL-oads  exists. 
On  the  contrary,  it  is  true  that  the  railroads  are  doing  all  in  their 
power  to  make  the  State  great  and  prosperous.  It  is  to  their  interest 
that  this  should  be  done.  If  in  their  power  to  exact  rates,  the  enforce- 
ment of  which  would  result  in  distress  and  poverty  to  communities 
along  the  lines,  no  one  interest  would  feel  the  harmful  effects  more 
quickly  or  forcibly  than  the  railroads  themselves.  The  business  inter- 
ests of  a  railroad  company  are  best  promoted  by  prosperity  in  every 
branch  of  industry  which  in  anyway  employs  transportation;  and  it  is 
a  fact,  so  far  as  the  influence  of  railroad  companies  can  contribute  to 
this  end,  the  State  to-day  is  prosperous,  and  no  arbitrary  reduction  in 
the  average  rates  now  charged  for  the  transportation  of  freight  or  pas- 
sengers should  be  made. 

Earl:  I  notice  the  accredited  agent  of  the  San  Francisco  Traffic  Association,  Colonel 
Barry,  is  present.  Colonel  Barry,  would  you  like  to  make  anj'  statement  to  the  com- 
mittee? 

^[r.  Barry:  Mr.  Chairman,  I  think,  although  I  can  hardly  say  I  replace  Mr.  Leeds— it 
is  absolutely  necessary  for  other  matters  of  great  importance  to  that  association,  that 
Mr.  Leeds  sliould  dei)art  from  the  .State  of  California,  and  he  left  to-day,  and  I  am  there- 
fore, although  not  entirely  fitted  for  the  task,  substituted  for  him  before  this  committee 
in  so  far  as  the  Traffic  Association  is  interested  in  this  matter,  and  in  so  far  as  that 
interest  should  be  represented  here. 

We  introduced  this  measure.  Senator  Gesford  made  an  opening  statement  which  out- 
lined the  character  of  this  bill.  Mr.  Leeds  has  given  certain  testimony,  I  believe.  In  so 
far  as  we  have  acted  at  all,  we  have  laid  our  case  before  vou.  I  think  it  is  only  fair, 
instead  of  making  any  statement  this  evening,  that  after  "these  gentlemen,  repre"senta- 
tives  of  the  various  roads,  have  made  their  statements,  that  the  Traffic  Association  shall 
receive  that  courtesy  from  this  coniniittee. 

Possibly,  as  we  have  introduced  this  measure  and  have  made  our  statement  in  full,  we 
might  be  permitted  to  reply,  and  for  that  reason  I  do  not  desire  to  say  anything  this 
evennig,  but  I  shall  beg  of  the  committee  at  some  future  time  the  opportunity  of  either 
repiymg  or  submitting  an  argument  to  the  committee  in  reference  to  what  has  been 
said  by  the  representatives  of  the  various  railroads. 

It  seems  to  me  that  thus  far  this  measure  is  on  trial.  These  eentlemen  com.e  here  with 
statementsand  arguments,  and  it  seems  it  would  interfere  with  the  logical  consideration 
of  the  subject  if  anything  I  should  say,  or  any  representative  of  the  Traffic  Association, 
should   be  interjected  at  this  time,  and  it  would  be  better  that  all  that  can  be  said 


—  157  — 

against  the  measure,  either  as  to  its  general  scope  or  plan,  or  as  to  its  details,  be  said,  so 
that  we  may  make  a  comprehensive  reply,  and  therefore,  Mr.  ('hairman,  if  agreeable  to 
the  committee,  I  slu)iild  prefer  not  to  siiy  anything,  but  wait  until  the  closing  case  ia 
presented  against  the  measure. 

Earl:  Certainly;  the  opportunity  will  be  given  to  all  to  be  heard,  and  we  will  be  glad 
to  hear  from  you^  Colonel,  at  any  stage  of  the  hearing— at  any  time  during  the  hearing. 

Mr.  Barry:  1  shall  say  here,  Mr.  Chairman,  that  1  shall  be  present  here  at  all  of  the 
meetings  hereafter,  and.  shall  give  that  attention  to  the  arguments  of  the  gentlemen. 
that  their  importance  demands,  and  then  I  shall  ask  a  hearing. 


Statement  of  C.  F.  Smurr. 

(General  Freight  Agent  Southern  Pacific  Company.) 

Regarding  the  proposed  constitutional  amendment  now  under  con- 
sideration by  your  honorable  body,  I  would  say: 

As  the  documents  thus  far  introduced  read,  it  is  clearly  the  intention 
that  in  the  absence  of  legislation,  the  Constitution  shall  provide  spe- 
cifically what  classification  shall  be  employed,  to  wit:  the  Western  Classi- 
fication; and  what  table  of  rates  shall  be  employed  as  a  maximum,  to 
wit:  that  set  forth  therein  as  the  California  Distance  Tarifl';  thus  wiping 
out  all  existing  classifications,  rate-sheets  and  i-ates,  and  that  from  date 
of  adoption,  or  thereafter,  as  may  be  provided,  all  property  must  be 
transported  under  classes,  .as  set  forth  in  said  Western  Classification, 
and  at  rates  not  exceeding  those  set  forth  in  said  "  California  Distance 
Tariff-." 

Practically  speaking,  given  a  railroad  within  the  State  of  California^ 
its  fixed  expenses  known,  its  operating  expenses  approximately  known, 
although  there  are  many  disturbing  factors  that  make  this  feature  a. 
constantly  variable  one,  leading  among  which  is  climatic  conditions, 
disasters  incident  to  fire,  snow,  and  flood,  and  in  addition,  given  the 
volume  of  traffic,  direction  of  movement,  its  character  or  description, 
length  and  direction  of  haul,  freedom  from  competition  of  markets  and 
freedom  from  competition  of  carriers,  it  would  not  be  a  difficult  matter  to 
devise  a  freight  tariff  to  be  applied  thereto  that  would  be  sufficient  to 
meet  the  fixed  and  operating  expenses  of  such  a  road. 

On  the  other  hand,  given  a  railroad  within  the  State  of  California, 
its  fixed  expenses  unknown,  its  operating  expenses  only  approximately 
known,  and  subject  to  the  variable  conditions  before  named,  its  traffic 
wholly  unknown  or  undeveloped,  competition  of  markets  and  carriers 
existing  in  active  degree,  and  the  proposition  of  making  freight  tariff's 
is  no  longer  to  be  regarded  as  simple  and  one  easy  of  solution.  This 
latter  condition  is  what  has  prevailed  from  date  of  the  completion  of 
each  and  every  railroad  within  the  State,  and  the  tariffs  as  applied 
to-day  are  the  outgrowth  of  the  experience  of  a  quarter  of  a  century  or 
more;  and  the  idea  that  any  single  individual,  without  local  knowledge 
and  exact  information,  within  slightly  more  than  a  twelvemonth,  can 
proceed  to  evolve  one  uniform  distance  tariff  that  will  meet  the  variety 
of  commercial  conditions  existing  within  this  State,  and  that  will  do 
justice  to  the  people  as  well  as  the  carriers,  is  in  my  humble  judgment, 
to  say  the  least,  ludicrous  presumption. 

In  practical  working  we  are  called  on  to  consider  the  question  of 
making  changes  in  or  establishing  new  rates  daily,  and  necessarily 


—  158  — 

must  have  cine  regard  for  bulk,  likelihood  to  damage  (for  the  rail  car- 
riers are  insurers),  value,  volume  of  traffic,  direction  of  movement, 
length  of  haul,  return  empty  haul,  competition  of  markets,  competi- 
tion of  carriers,  and  cost  of  service.  The  propositions  requiring  such 
consideration  come  to  us  from  the  commercial  communities  served,  and 
as  a  rule  may  be  regarded,  and  are,  in  the  public  interest;  and  it  may 
be  said,  we  believe,  with  propriety,  that  whensoever  it  can  be  demon- 
strated that  a  modification  of  rates  is  necessary  to  development  in  a  gen- 
eral or  specific  way — that  such  modification  will  bring  about  improved 
results — the  emergency  is  met;  the  aim  in  general  being  that,  on  the 
whole,  rates  shall  be  such  as  to  bring  about  the  maximum  development 
of  production  in  all  its  different  forms,  and  at  the  same  time  bring 
enough  revenue  to  enable  continuance  of  the  service  of  the  roads  already 
established,  and  encouragement  in  direction  of  construction  of  new  roads, 
and  the  consequent  development  resulting  therefrom. 

Touching  the  assertion  made  by  the  Traffic  Association  of  San  Fran- 
cisco's representative  at  your  first  meeting,  in  effect,  that  an  inflexible 
classification  as  a  part  of  the  Constitution  or  statutes  of  the  State  of 
California,  by  reason  of  inability  to  make  changes  therein  save  once  in 
two  years,  would  work  no  hardship  on  the  commercial  community,  and 
assigning  as  one  of  the  reasons  therefor  that  the  local  classification  of 
the  Southern  Pacific  Company  had  not  been  changed  "within  the  past 
two  years  or  witliin  the  past  ten  years" — I  am  compelled  to  characterize 
said  assertion  as  being,  to  say  the  least,  extremely  reckless  Had  the 
Traffic  Association  of  San  Francisco,  through  its  representative,  wished 
to  present  the  facts  to  you,  it  could  have  obtained  them  from  the  files  of 
the  State  Board  of  Railroad  Commissioners,  where  the  various  changes 
as  made  within  the  past  one  year,  two  years,  or  ten  years  are  to  be 
found.  The  fact  is,  there  were  numerous  changes  made  in  the  local 
classification,  as  used  by  the  Southern  Pacific  Company  on  its  Central 
California  traffic,  during  the  year  1892 — forty-five  in  number.  During 
the  same  period  commercial  necessities  required  changes  in  the  Western 
Classification,  aggregating  265  in  number,  ^^'hen  you  take,  into  consid- 
eration the  vast  area  over  which  the  Western  Classification  is  in  opera- 
tion, to  wit,  practically  all  the  territory  west,  say,  of  the  Chicago  merid- 
ian, you  will  at  once  see  that  relatively  there  have  been  more  changes  in 
the  Southern  Pacific  Company's  local  classification  than  in  the  Western, 
which  is  set  up  as  the  inflexible  standard,  and  which  it  is  proposed  to 
adopt,  regardless  of  commercial  requirements. 

Again,  for  the  term  January  1,1883,  to  January  1,  1893,  ten  years,  as 
referred  to  by  the  Traffic  Association's  representative,  the  local  classifi- 
cation of  the  Southern  Pacific  Company  has  been  changed  as  follows: 
Additions  to,  365;  removals  from,  59;  modifications  of  the  current 
classification,  254;  total  changes,  678.  These  general  changes,  and,  in 
addition,  thousands  of  individual  commodity  changes  from  and  to 
given  points,  have  been  made  necessary  within  the  period  named,  and 
because  of  the  ever-changing  commercial  and  competitive  conditions. 

One  word  more  with  respect  to  the  proposed  rigid  Constitution  classi- 
fication: The  document  referred  to  in  the  resolution  indicates  rating  as 
follows:  Coke,  carloads — coke  tariff  rates.  Ore,  n.  o.  s.,  released  to 
valuation  not  exceeding  $100  per  ton — special  ore  tarifi"  rates. 

Query:  Which  one  of  the  differing  coke  and  ore  tarifis,  as  in  use  by 
each  of  the  seventy-four  railroads  that  have  adopted  and  use  the  West- 


—  159  — 

ern  Classification,  will,  under  this  proposed  Act,  become  a  part  of  the 
Constitution  of  California? 

It  may  not  be  amiss  to  present  for  your  information  a  brief  history 
of  the  document  known  as  the  Western  Classification,  first  called  Joint 
Western  Classification,  and  issued  April  16,  1883,  and  used  thereafter 
by  the  following  railroads: 

Atchison,  Topeka,  and  Santa  Fe  Railroad. 

Burlington  and  Missouri  River  Railroad. 

Central  Iowa  Railway. 

Chicago  and  Alton  Railroad. 

Chicago,  Burlington,  and  Quincy  Railroad. 

Chicago,  Milwaukee,  and  St.  Paul  Railway. 

Chicago,  Rock  Island,  and  Pacific  Railway. 

Chicago  and  Northwestern  Railway. 

Chicago,  St.  Paul,  Minneapolis,  and  Omaha  Railway. 

Denver  and  Rio  Grande  Railway. 

Des  Moines  and  Fort  Dodge  Railroad. 

Illinois  Central  Railroad. 

Kansas  City,  Fort  Scott,  and  Gulf  Railroad. 

Missouri  Pacific  Railway. 

Minneapolis  and  St.  Louis  Railway. 

Sioux  City  and  Pacific  Railroad. 

Union  Pacific  Railway. 

Wabash  Railroad. 

It  was  a  classification  of  articles  carried  by  the  roads  named,  and  was 
added  to  from  time  to  time  as  the  necessities  developed,  and  its  adapta- 
tion to  the  freight  traffic  of  the  particular  territory  served  by  the  roads 
named  was  a  comparatively  easy  matter.  April  1,  1887,  the  name  was 
changed  from  Joint  Western  Classification  to  Western  Classification, 
and  the  work  of  adding  thereto,  or  taking  from,  or  making  changes  in, 
as  necessities  developed,  proceeded  in  the  usual  course.  About  the 
same  time,  to  wit:  April  5,  1887,  the  Interstate  Commerce  law  became 
effective.  Then  the  document  was  in  such  wide  range  of  use  that  it  was 
deemed  advisable  to  utilize  it  as  the  fundamental  or  foundation  princi- 
ple of  rate  making  on  transcontinental  interstate  traffic.  A  schedule  or 
table  of  class  rates  applying  to  and  from  the  Pacific  Coast  and  what  is 
known  as  Atlantic  seaboard  territory,  Buffalo-Pittsburg  territory, 
Detroit-Cincinnati  territory,  Chicago  territory,  Mississippi  River  terri- 
tory, and  Missouri  River  territory,  was  finally  arranged  for  and  pub- 
lished, the  Western  Classification  applying  thereto,  and  it  has  continued 
in  use  as  the  foundation  of  freight  rates  on  transcontinental  traffic  up 
to  this  time. 

It  was  apparent  from  the  start,  however,  that  it  could  not  be  relied 
on  exclusively  to  meet  the  requirements  of  commerce.  As  a  conse- 
quence, the  roads  engaged  in  transcontinental  traffic  issued  commodity 
rates,  which  aggregate  to-day  on  west-bound  business  some  1,329  in 
number,  and  on  east-bound  business  some  332  in  number.  From  this 
you  will  perceive  that  the  Western  Classification,  with  its  table  of  rates, 
comes  far  from  being  a  perfect  document,  and  such  a  one  as  to  meet  all 
the  requirements  of  commerce.  The  same  conditions  with  respect  to 
necessity  for  commodity  tariffs  that  prevailed  on  transcontinental  traffic, 
prevails  in  practically  all  territory  where  the  Western  Classification  is 
now  in  use.     As  it  was  extended  westward  to — Colorado,  for  example — 


—  IGU  — 

the  leading  industries  there  were  so  dilFerent  from  those  of  Iowa  and  Illi- 
nois that  it  could  only  be  partially  utilized,  and  naturally  a  large  number 
of  commodity  rates  were  necessitated.  And  this  same  experience  ha& 
been  found  wherever  it  has  been  put  into  effect— Utah,  Montana,  Wash- 
ington; the  varying  conditions  of  production,  consumption,  etc. — more 
especially  the  former— necessitating  radical  departures  from  the  West- 
ern Classification  and  its  table  of  class  rates.  The  consequent  tendency 
throughout  the  country  to-day  is,  instead  of  restraint  and  rigidity  of 
classification,  in  the  direction  of  flexibility  of  classification. 

Regarding  the  statement  made  by  the  Traffic  Association  of  San  Fran- 
cisco,*th rough  its  representative,  that  the  Southern  Pacific  does  to-day 
apply  the  Western  Classification  on  certain  portions  of  its  California 
tralhc,  I  have  to  say  that  this  is  technically  correct.  When  the  Santa 
Fe  System  built  into  Southern  California,  it  brought  with  it  the  Western 
Classification,  tariffs,  rules,  and  conditions  that  governed  its  business 
elsewhere,  and  it  adopted  the  Southern  Pacific  Company's  scheduleof 
the  merchandise  and  numerous  commodity  rates  without  material 
change  or  reduction  therein.  Instead  of  graduating  its  merchandit-e  to 
first,  second,  third,  and  fourth-class  rates,  the  same  rate,  as  a  rule,  was 
used  by  it  for  each  of  the  four  classes — the  result  of  this  adjustment  of 
tariir  to  the  Western  Classification  in  Southern  California  being  to 
practically  produce  the  same  revenue  as  would  result  from  what  is  known 
as  the  local  classification  and  merchandise  rates  of  the  Southern  Pacific 
Company;  or,  to  make  it  clear  to  you,  in  practical  operation  the  use  of  the 
Western  Classification,  when  applied  to  the  scheclule  of  rates  as  above 
described,  is  in  no  material  features  diff"erent  from  tlie  local  classifica- 
tion that  was  in  use  in  Southern  California,  and  is  now  in  use  in 
Central  California. 

The  theory  of  the  local  classification  of  the  Southern  Pacific  Com- 
pany being  to  simplify  in  fullest  degree,  consequently  it  starts  out  with 
the  announcement,  in  effect,  that  all  articles  not  named  specifically 
therein  will  be  charged  for  at  merchandise  rates — then  proceeds  to  indi- 
cate the  exceptions,  enumerating  articles  that  are  light,  bulk}',  of  excess- 
ive value,  liable  to  damage,  inflammable,  or  hazardous  in  any  measure, 
and  provides  higher  ratings,  ranging  from  one  and  a  half  to  clouble  first 
class  thereon — the  same  in  principle,  in  this  regard,  as  the  Western  Classi- 
fication. It  also  enumerates  various  staple  articles  on  which  carload  rates 
are  made — similar  in  principle  to  the  Western  Classification.  The  chief 
difference  between  the  local  classification  of  the  Southern  Pacific  Company 
referred  to  and  the  Western  Classification,  is  that  the  Western  under- 
takes to  enumerate  practically  each  and  every  article  known  to  trade 
that  is  transported  by  rail  and  other  carriers.  This  makes  of  said  West- 
ern Classification  a  very  voluminous  document.  Of  course  you  appre- 
ciate that  the  classification,  no  matter  whether  it  be  the  local  classifica- 
tion of  the  Southern  Pacific  Company  or  the  Western  Classification,  or 
any  other  classification,  does  not  within  itself  make  the  tariff';  it  is 
simply  the  key  to  the  tariff;  or  it  is  the  index  to  the  charge  that  should 
be  made,  said  charge  represented  by  the  rate  corresponding  to  the  class 
named  and  found  in  the  table  of  rates.  The  classes  are:  On  less  than 
carloads,  first,  second,  third,  and  fourth;  on  carloads,  fifth.  A,  B,  C,  D, 
and  E.  You  will  perceive  that  if  all  less  than  carload  quantities  of 
each  and  every  article  named  in  the  Western  Classification  takes  either 
first,  second,  third,  or  fourth  class,  and  the  same  rate  is  used  for  each  of 


—  161  — 

these  four  classes,  that  it  is  equivalent  to  a  rate  made  by  using  the 
Southern  Pacific  Company's  local  classification,  wherein,  as  before  stated, 
it  is  set  forth  that  all  articles  not  named  specifically  therein  will  be 
charged  for  at  merchandise  rates. 

The  Western  Classification  is  also  used  in  conjunction  with  a  table  of 
graduated  class  rates  between  Central  California  points,  San  Francisco, 
for  example,  and  Southern  California  points.  This  has  been  the 
principle  of  making  rates  to  and  from  that  territory  since  completion 
of  the  rail  lines  joining  the  two  communities.  Originally,  however,  the 
classification  as  applied  to  the  graduated  table  of  class  rates  was  one 
devised  and  adopted  by  the  Southern  Pacific  Company  of  its  own 
motion,  adopted  with  the  intention  of  enabling  San  Francisco  to  compete 
by  rail  in  that  territory  as  against  the  water  carriers.  When  later  the 
Western  Classification  became  prominent,  it  was  deemed  expedient  to 
apply  it  to  the  table  of  graduated  rates  that  had  been  in  force  for  a 
term  of  years  to  and  from  the  territory  mentioned,  the  particular  desire 
being  to  place  San  Francisco  merchants  in  position  to  enter  that  terri- 
tory in  competition  with  merchants  of  other  commercial  centers  that 
were  using  a  similar  classification. 

It  may  be  proper  to  say  here  that  as  a  classification,  in  the  ordinary 
acceptation  of  the  term,  not  as  a  constitutional  or  statutory  provision, 
making  it  a  rigid  or  infiexible  instrument,  the  Southern  Pacific  Com- 
pany has  no  material  objection  thereto,  and  is  not  averse  to  its  applica- 
tion where  it  can  be  made  without  such  loss  in  revenue  as  will  embarrass 
or  make  it  impracticable  to  continue  operating  the  various  railroads  in 
the  State  of  California  now  under  its  control. 

The  State  of  California  embraces  about  156,000  square  miles.  Of  this, 
25  per  cent  (or  39,000  square  miles)  is  valley  and  foothill,  22t|-  per  cent 
desert,  52^  per  cent  mountains.  The  State  of  Kansas  embraces  about 
81,700  square  miles,  the  whole  of  which  is  practically  a  level  and  pro- 
ductive country.  The  people  of  the  State  of  California  have  within  its 
boundaries,  radiating  from  San  Francisco,  say  900  miles  of  navigable 
inland  waters,  over  which  established  steamer  and  sail  lines  are  now 
operating,  and  the  whole  of  its  coast  line,  from  Oregon  to  Mexico,  ap- 
proximately 700  miles  of  ocean  front,  where  they  have  like  competitive 
advantages.  The  railroads  operated  by  the  Southern  Pacific  Company 
compete  with  the  waterways  above  described  in  greater  or  less  degree 
throughout  the  whole  of  the  State,  and  directly  at  all  the  principal 
towns  about  the  bay  of  San  Francisco;  with  the  numerous  navigable 
inlets  and  sloughs,  on  the  Sacramento  and  San  Joaquin  Rivers;  with  the 
Pacific  Ocean  at  Santa  Cruz  and  Monterey  Bays,  Santa  Barbara,  Ven- 
tura, and  Santa  Monica  and  San  Pedro  Bays.  In  other  words,  water 
competition  affects  in  greater  or  less  degree  practically  every  rate  made 
by  the  Southern  Pacific  Company's  roads  within  the  State  of  California 
to-day.  This,  coupled  with  the  fact  that  a  large  portion  of  the  State's 
area  is  mountainous,  desert,  non-productive,  costly  of  operation,  should 
bring  conviction  to  the  minds  of  your  honorable  committee  of  the  im- 
practicability of  introducing  and  applying  the  California  Distance  Tariff, 
or  any  other  uniform  distance  tariff",  whether  it  be  subject  to  the  West- 
ern Classification  or  any  other  classification. 

For  example:  The  distance  by  the  shortest  operated  rail  line  from 
Napa  to  San  Francisco  is  seventy  miles.     California  wine  in  wood,  car- 
loads, per  Western  Classification,  takes  second  class.     The  proposed  Cal- 
11 


—  162  — 

ifornia  Distance  Tariff  makes  second-class  rate  for  seventy  miles  25  cents 
per  1 00  pounds  as  maximum  that  could  be  charged.  In  fact,  the  Southern 
Pacific  Company,  forced  by  the  water  competition  from  Napa  to  San 
Francisco,  charges  on  this  commodity  to-day  but  5  cents  per  100 
pounds,  which  produces  but  a  trifle,  may  be  one  mill  per  ton  per  mile, 
above  the  actual  cost  of  the  service;  but  the  business  is  taken  in  the 
face  of  the  cheapest  known  mode  of  carriage,  and  is  regarded  as  desir- 
able because  of  its  ability  to  contribute  that  one  solitary  mill  toward 
meeting  the  other  or  commonly  called  fixed  expenses  incident  to  the 
conduct  of  transportation,  and  to  that  degree  it  lightens  the  burden  or 
reduces  the  charge  that  must  necessarily  be  imposed  on  all  the  rem.ain- 
ing  traffic.  Under  the  terms  of  the  proposed  amendment,  the  Southern 
Pacific  Company  could  not  make  etiective  a  commodity  or  independent 
rating  on  any  article  that  is  classified  in  the  Western  Classification. 

The  only  method  would  be  to  reduce  the  class  rate  in  cases  where  it 
is  found  necessary  in  order  to  meet  competition  or  any  peculiarity  of 
condition  that  might  control.  Should  the  Southern  Pacific  Company 
desire  to  continue  in  the  business,  and,  having  been  compelled  by  influ- 
ences beyond  its  control  to  establish  this  as  its  second-class  rate  for  the 
seventy  miles  from  Napa  to  San  Francisco,  it  thus  fixes  5  cents  per 
one  hundred  pounds  as  second-class  rate  fur  any  given  seventy  miles 
between  any  two  given  points  within  the  State  of  California  on  any 
commodity  the  Western  Classification  names,  and  there  are  several,  as 
taking  second-class  rate.  Having  established  this  as  the  rate  for  sev- 
enty miles,  you  will  at  once  perceive  that  for  seventy-five  miles  distance, 
preserving  tbe  same  differential  as  the  California  Distance  Tarifi'observes, 
the  second-class  rate  would  be  6  cents,  as  against  California  Distance 
Tarifl'  provision  of  26  cents;  for  eighty  miles  it  Avould  be  8  cents,  as 
against  California  Distance  Tariff  provision  of  28  cents;  for  one  hundred 
miles,  it  would  be  16  cents,  as  against  California  Distance  Tarifi"  provision 
of  36  cents.  The  injustice  of  such  requirement  you  will  at  once  appre- 
ciate, and  that  its  eflect  will  be  to  remove  the  Southern  Pacific  Com- 
pany's roads  as  competitors  with  water  or  other  rival  carriers,  for  this 
very  essential  reason:  that  it  cannot  continne  in  business  as  a  common 
carrier  and  base  its  rates  throughout  the  whole  State  of  California  on 
the  extreme  competitive  conditions  that  exist  between  Napa  and  San 
Francisco;  and  its  withdrawal  from  the  field  means  an  advance  in  the 
rates  of  its  water-carrying  competitors,  just  as  surely  as  the  tides  rise 
and  fall.  There  are  scores  of  instances  where  similar  conditions  pre- 
vail, and  where  just  such  results  as  outlined  in  the  Napa  wine  rate 
would  follow  the  adoption  of  a  rigid  classification  and  the  California  or 
any  other  distance  tariff. 

In  the  State  of  Kansas,  where  the  adverse  physical  conditions  exist- 
ing in  the  State  of  California  do  not  have  existence,  where  the  country 
is  practically  level,  no  inland  waterways  worthy  of  the  name  of  com- 
petitor, no  coast  line,  no  mountain  ranges  or  deserts  to  traverse — even 
there,  and  without  a  rigid  classification  being  imposed,  a  uniform  dis- 
tance tarifi*  does  not  meet  the  requirements.  The  Santa  Fe,  as  well  as 
other  roads  in  Kansas,  have  in  addition  to  the  distance  tariff  numerous 
special  tariffs  and  commodity  tarifls  and  rates  issued  from  time  to  time 
to  meet  the  commercial  requirements  of  the  various  communities  they 
serve.  In  fact,  however,  as  has  been  presented,  it  is  not  intended  that 
California,  with  its  unfavorable  physical  conditions  as  compared  with 


—  163  — 


Kan=as,is  to  have  as  its  maximum  rates  the  Kansas  Distance  Tariff,  but 
it  is  proposed  that  it  shall  have  as  its  maximum  rates  a  distance  tariff 
as  compiled  by  the  Traffic  Association  of  San  Francisco,  and  which  is 
lower  than  the  Kansas  Distance  Tariff  in  the  following  degree: 


Per  Cent. 

First  class 20 

Second  class 27 

Third  class 25 

Fourth  class 28 

Fifth  class 31 


Per  Cent. 

Class  A. 10 

Class  B 12 

Class  C - -  10 

Class  D 25 

Class  E 16 


The  representative  of  San  Francisco's  Traffic  Association  has  seen  fit 
to  mention  particularly  the  California  Pacific  Railroad,  commenting  on 
its  earnings,  with  evident  intent  of  creating  in  your  minds,  that  by  reason 
of  said  earnings  undue  or  excessive  rates  are  imposed.  The  facts  are 
that  no  railroad  in  California  or  any  State  in  the  Union  has  more  active 
competition,  and  that  by  the  very  cheapest  known  carrier,  than  has  the 
California  Pacific.  This  road,  as  you  know,  parallels  the  Sacramento 
River  and  the  upper  bays;  reaches  from  Knights  Landing  to  South 
Vallejo,  with  branches,  one  from  Napa  Junction  to  Calistoga,  and  from 
Davisville  to  Sacramento,  every  foot  of  which  is  in  direct  competition 
with  water,  save  north  of  Napa,  and  that,  too,  in  only  slightly  modified 
degree.  Three  regular  steamer  lines  are  plying  on  the  Sacramento 
River,  besides  outside  steamers,  and  in  addition  sailing  craft  that  reach 
Suisun,  Cordelia,  South  Vallejo,  and  Napa.  With  this  unsurpassed 
competitive  condition  as  the  controlling  factor  in  the  regulation  of  rates, 
it  is  simply  an  impossibility  for  the  Southern  Pacific  Company  to 
impose  rates  that  can  reasonably  be  regarded  as  excessive  or  exorbitant, 
and  its  patrons  can  for  all  time  rest  easy  in  their  enjoyment  of  the  very 
lowest  minimum  rates  consistent  with  operation  and  maintenance  of 
the  property. 

The  explanation  of  the  earnings  referred  to  lies  in  the  fact  that  the 
territory  served  by  the  California  Pacific  Railroad,  the  Sacramento 
River,  and  the  upper  bays,  is  exceedingly  fertile  and  productive,  and 
the  further  fact  that  the  California  Pacific  Railroad  is,  in  practical 
operation,  the  stem  of  that  portion  of  the  railway  system  radiating  from 
San  Francisco  Bay  northward  and  eastward — in  other  words,  the  small 
end  of  a  funnel  through  which  the  larger  proportion  of  the  traffic  of 
the  system  of  railroads  operated  by  it  in  California,  and  adjoining 
States  and  Territories,  flows.  Further,  with  respect  to  the  mention  made 
of  the  earnings  of  the  South  Pacific  Coast  Railway,  the  evident  intention 
being  to  create  in  your  minds  that  by  reason  of  said  earnings  undue  or 
excessive  charges  are  imposed,  I  desire  to  say  that  the  same  class  of  com- 
petition exists.  This  road  parallels  San  Francisco  Bay  from  San  Fran- 
cisco to  San  Jose,  and  its  southern  terminus  is  on  Santa  Cruz  Harbor, 
where  it  meets  water  craft,  both  steam  and  sail,  and  being  so  situated 
that  the  controlling  factor,  to  wit:  water,  or  the  cheapest  knoAvn  method 
of  carriage,  makes  its  rates,  I  may  with  propriety  again  urge  that  excess- 
ive or  undue  charge  for  services  rendered  is  beyond  the  possibilities. 

Reference  has  been  made  by  the  Traffic  Association  of  San  Francisco, 
through  its  representative,  to  a  15  cents  per  ton  per  mile  maximum 
rate  as  being  in  use  by  the  Southern  Pacific  Company.  The  facts  are, 
there  was  a  statute  that  did  so  permit,  and  the  same  was  in  full  force  prior 
to  the  new  Constitution,  which  became  effective  January  1, 1890.     Since 


—  164  — 

then  there  has  been  no  maximum  provided  by  law,  other  than  as  might 
be  made  by  the  State  Board  of  Railroad  Commissioners,  and  it  is  a  fact 
that  the  average  rate  charged  by  the  roads  operated  by  the  Southern 
Pacific  Company  in  the  State  of  California  on  their  local  traffic  to-day 
is  less  than  2|  cents  per  ton  per  mile,  and  that  their  average  pro  rata 
earning  on  through  traffic  is  less  than  one  half  that  earned  on  their 
local  traffic— the  reduced  earning  on  the  through  traffic  being  attribut- 
able to  the  absolute  necessity  of  providing  abnormally  low  rates  in  order 
to  enable  the  marketing  of  the  products  of  California  in  the  thickly  popu- 
lated States  which  are  found  two  thousand  miles  and  farther  distant. 

With  these  figures,  then,  as  indicating  the  average  rate  neces- 
sary in  order  to  meet  the  fixed  and  operating  expenses  of  the  roads 
operated  by  the  Southern  Pacific  Company,  you  will  at  once  appre- 
ciate the  embarrassment  that  would  result  from  the  adoption  of  the 
proposed  California  Distance  Tariff"  as  a  maximum  provision  govern- 
ing every  class  and  every  distance,  it  being  self-evident,  given  an  aver- 
age rate  necessary  to  earn,  that  the  higher  the  maximum  the  lower  may 
be  the  minimum;  in  other  words,  holding  the  carrier  down  to  the  maxi- 
mum proposed  will  necessarily  raise  the  minimum  in  order  to  enable  it 
to  earn  the  average.  The  result  in  practical  operation  will  be  that  the 
rail  carrier  will  go  out  of  the  transportation  of  many  low  grade  com- 
modities, and  be  compelled  to  raise  the  rate  on  many  staple  products. 

I  have  carefully  compared  rates  as  proposed  by  the  Traffic  Association 
of  San  Francisco  with  rates  in  effect,  and  my  conclusion  is  that  the 
adoption  of  the  proposed  amendment  will  carry  with  it  a  reduction  of 
revenue  as  derived  from  freight  traffic,  of  say  40  per  cent,  which  means 
absolute  inability  of  the  several  railroads  operated  by  the  Southern 
Pacific  Company  to  continue  rendering  service  of  a  grade  as  at  present 
given  to  the  people  of  this  State.  And  in  conclusion  I  beg  to  submit  if 
the  railroads  now  serving  the  people  of  this  State  should  be  hampered 
by  a  rigid  classification,  and  in  addition  a  uniform  distance  tariff,  that 
must  be  applied  regardless  of  physical  or  competitive  conditions,  as  a 
maximum,  thus  depriving  the  carriers  of  opportunity  or  ability  to  con- 
sider and  thus  be  guided  by  the  varied  fluctuating  but  controlling  factors 
that  enter  into  the  conduct  of  transportation  within  the  State  of  Cali- 
fornia? It  is  my  judgment  that  such  requirement  will  prove  a  veritable 
boomerang,  and  bring  about  such  depressed  commercial  and  industrial 
conditions,  not  only  as  applied  to  the  railroads,  but  as  applied  to  each 
and  every  enterprise  within  its  borders,  as  has  never  been  felt  since  its 
organization  as  a  State. 


Southern  Pacific  Company. 

(Statement  of  G.  L.  Lansing,  Secretary  and  Controller.) 

The  mileage  of  railroads  in  this  State,  as  shown   by  report  of  the 
Railroad  Commission  for  December  31,  1891,  was  as  follows: 

Operated  by  the  Southern  Pacific  Company _ 2,894.36  miles 

Operated  by  other  companies.. 1,483.82  miles 

Total 4,378.18  miles 


—  165  — 

The  companies  not  controlled  by  the  Southern  Pacific  Company  thus 
owned  on  the  date  named  34  per  cent  of  the  entire  mileage.  Of  the 
efiect  on  these  roads  of  the  proposed  tariff,  its  author  has  stated  that  he 
had  no  knowledge  or  information.  But  when  his  attention  was  thus 
called  to  the  matter,  the  form  of  the  bill  was  changed,  excluding  nearly 
all  of  the  lines  excepting  those  of  the  Southern  Pacific  Company  from 
its  present  operation.  Mr.  Leeds  further  explained  that,  though  he  had 
not  examined  the  efiect  of  the  tariff  on  the  smaller  roads,  he  had 
examined  as  to  its  effects  on  the  Southern  Pacific  Company's  lines.  His 
statement  of  the  results  of  that  examination  furnish  the  principal,  if 
not  the  entire  fund  of  facts,  on  which  the  adoption  of  the  proposed  tariff 
and  classification  is  justified.  A  fair  and  just  judgment  of  the  con- 
clusions which  this  bill  assumes,  therefore,  requires  a  careful  considera- 
tion of  the  relevance  and  application  of  Mr.  Leeds'  statements  as  to 
facts,  their  correctness,  and  their  sufficiency.  As  the  measure  rests  on 
the  statements  of  this  man,  a  fair  judgment  of  its  merits  requires  also 
to  be  considered,  that  the  bill  is  avowedly  framed  and  proposed  in  the 
interest  of  a  society  of  men  engaged  in  business  in  San  Francisco,  the 
membership  of  which  is  secret,  and  one  of  its  purposes  has  been  stated 
to  be  to  fight  the  Southern  Pacific  Company  whenever  and  wherever  it 
can  do  so. 

The  proposed  tariff  is  based  on  those  in  effect  in  some  of  the  agricult- 
ural Western  States,  and  notably  the  State  of  Kansas.  Its  rates  are 
lower  than  those  of  the  Kansas  Distance  Tariff,  and  will,  as  stated  by 
Mr.  Leeds,  reduce  the  earnings  from  local  freight  in  California  on  the 
Southern  Pacific  Company's  lines  25  or  30  per  cent.  The  person 
responsible  for  its  introduction  as  a  proposed  portion  of  the  Constitu- 
tion of  our  State  is  lately  from  Kansas,  was  at  one  time  Trafi&c  Mana- 
ger of  the  Missouri  Pacific  Railway,  operating  a  large  system  of  rail- 
roads in  that  State,  and  as  such  is  familiar  with  the  effect  on  that  State 
of  the  Kansas  Distance  Tariff'.  His  statements  on  this  subject  convey 
the  impression,  as  I  understand  it  was  intended  they  should,  that  Kan- 
sas and  its  roads  have  been  prosperous,  and  that  railroad  construction 
has  been  encouraged,  with  corresponding  development  and  advance- 
ment of  the  resources  of  the  country.  The  intended  inference  would 
follow  that  a  similar  tarifi'  for  California  (though  the  tariff"  proposed  has 
been  found  to  be  lower  than  that  of  Kansas)  would  bring  like  prosperity 
and  development  to  the  people  and  the  railroads  of  this  State.  Let  us 
inquire  into  the  railroad  prosperity  of  Kansas. 

In  their  report  for  1890  (pp.  IX.,  et  seq.)  the  Railroad  Commission  of 
that  State,  in  a  general  review  of  the  railroad  situation  there,  says: 

"We  have  fifteen  hundred  miles  of  railroad  which  is  worse  than 
worthless  to  its  owners,  and  a  burden  upon  the  commerce  of  the  State 
as  a  whole,  though  a  blessing  to  the  country  along  its  line.  It  came  by 
invitation,  encouragement,  and  support  of  the  people;  it  cannot  be 
ignored  in  the  discussion  of  rate-making  for  the  rest." 

At  the  commencement  of  1SS5  there  were  in  Kansas  four  thousand 
and  thirty-eight  miles  of  road.  From  1885  to  1887,  inclusive,  two 
thousand  five  hundred  and  eleven  miles  were  constructed.  Since  then 
the  annual  construction  has  been  as  follows:  1888,  one  thousand  nine 
hundred  and  sixty-seven  miles  were  constructed;  1889,  two  hundred 
and  thirty-nine  miles  were  constructed;  1890,  one  hundred  and  thirty- 


—  166  — 

six  miles  were  constructed;  1891,  ten  miles  were  constructed;  1892,  one 
mile  was  constructed. 

The  conditions  in  Kansas  controlling  rates  and  traffic  have  thus 
brought  railroad  construction  in  that  State  to  a  stop. 

In  1890  the  Kansas  Commission  had  under  discussion  the  adoption 
of  the  Iowa  Distance  Tarilf,  the  rates  of  which  were  lower  than  those  in 
Kansas,  and  decided  to  maintain  the  higher  tariff  for  the  following 
reasons  (Rep.  1890,  pp.  117  et  seq.): 

1.  The  population  of  Iowa  is  greater  than  in  Kansas. 

2.  Freight  tonnage  is  correspondingly  greater.  For  the  year  ending 
Tune  30,  1889,  the  freight  tonnage  over  all  the  roads  operating  in  Iowa 
vvas  36,645,038;  in  Kansas,  21,454,367.  Tons  per  mile  of  road  in  Iowa, 
1,452;  in  Kansas,  1,321. 

3.  Expenses  in  Kansas  more  than  in  Iowa.  Operating  expenses  and 
taxes  per  mile  in  Iowa,  $3,144  40;  in  Kansas,  $3,347  88. 

The  Commission  then  conclude:  "As  to  those  roads  whose  sole  or 
chief  dependence  is  local  traffic,  the  reports  show  that  they  are  far  from 
being  self-sustaining.  What  the  people  living  in  the  agricultural  States 
of  the  West  are  chiefly  interested  in,  is  low  rates  to  points  where  the 
great  bulk  of  the  surplus  products  must  go  to  find  a  market  for  con- 
sumption; there  the  prices  are  fixed.  Rates  of  charges  for  transporta- 
tion to  intermediate  points  do  not  affect  the  prices  to  the  producer,  but 
the  cost  to  the  consumer."     (p.  118.) 

If  the  items  of  this  comparison  made  by  the  Commission  as  between 
Kansas  and  Iowa  were  applied  as  between  Kansas  and  California,  the 
result  would  prove  a  greater  argument  against  the  proposed  California 
Distance  Tariff  than  even  that  shown  by  the  Commission  against  the 
Iowa  Distance  Tariff. 

Compared  with  Iowa,  Kansas  shows  less  freight  traffic  by  one  hun- 
dred and  thirty-one  tons  per  mile  of  road,  Avith  an  increase  of  $203  per 
mile  for  expenses,  or  6^  per  cent.  The  returns  for  all  California  roads 
are  not  summarized  so  as  to  afford  a  comparison;  but  comparing  the 
Pacific  system  lines  of  the  Southern  Pacific  Company  with  the  Iowa 
lines,  shows  for  the  California  system  a  less  freight  traffic  by  one  hun- 
dred and  six  tons  per  mile  of  road,  with  an  increase  of  $2,144  per  mile 
for  expenses,  or  68^  per  cent. 

A  comparison  of  results  for  all  roads  in  a  State  can  clearly  be  used  only 
in  a  most  general  way,  and  to  one  not  familiar  with  all  the  conditions 
is  apt  to  mislead.  Thus,  the  fifteen  hundred  miles  of  road  which  the 
Kansas  Commission  characterize  as  worse  than  worthless  to  its  owners, 
but  a  blessing  to  the  country  along  its  line,  would,  if  its  returns  were 
added  to  those  of  a  prosperous  system,  modify  the  total  result  so  as  to 
give  the  false  impression  that  the  prosperous  lines  were  poor.  Railroad 
systems  similar  in  size,  traffic,  and  general  conditions,  so  far  as  such 
are  available,  furnish  the  fairest  and  most  reliable  basis  of  comparison 
possible.  Such  a  comparison  can  be  made  between  the  Pacific  system 
of  the  Southern  Pacific  Company  and  the  Missouri  Pacific  system'.  As 
shown  by  the  maps  published  in  the  annual  reports  of  these  companies, 
the  former  consists  of  main  lines,  with  numerous  branches  and  feeders 
extending  through  the  State  of  California,  and  into  neighboring  States 
and  Territories,  and  the  latter  occupies  a  relative  position  to  the  State  of 
Kansas.  As  the  author  of  the  proposed  amendment  to  our  Constitution 
Was  an  officer  of  this  Kansas  company,  he  will  be  able  to  exercise  a 


I 


—  167  — 

careful  criticism  of  my  statement  of  facts  regarding  that  system,  and 
save  your  honorable  committee  from  error  in  founding  upon*  them  any 
false  conclusions. 

The  following  is  a  comparative  statement  of  the  operations  and  the 
cost  thereof  for  the  systems  named: 

MissorRi  Pacific  System  ts.  Soctherx  Pacific  Compaxy. 
Comparative  Statement  of  Operating  Expenses  per  Unit  of  Traffic. 


Year,  1S90. 


Missouri  Pacific 
Sysiem. 


Southern  Pacific 

Co.  (Pacific 

System). 


Operating  expenses 

Revenue  train  miles 

Operating  expenses  per  train  mile 

Freight  and  passenger  car  miles 

Operating  expenses  per  car  mile,  in  cents 

Freight  cars  to  a  train 

Tons  of  freight  to  a  train 

Tons  of  freight  one  mUe 


f  1S,096.951  00 

17,558.465 
$1,030 

247,847,050 
7.302 

20.00 
160.7 

1,744,226,042 


$21,976,218  00 

16,436.898 
$1,337 

180,587,114 
12.169 

15.41 
136.8 

1,260,513,051 


Year,  1890. 

Missouri  Pacific              Southern  Pacific 
Exces>.                               Excet-s. 

Amount. 

Per 
Cent. 

Amount. 

Per 
Cent. 

Operating  expenses i 

$3,879,267 

•~>l  43 

Revenue  train  miles 

1,122,067 

6.82 

Operating  expenses  per  train  mile 

$0.3070 

29  80 

Freisht  and  passenger  car  miles 

67,259,939 

37.24 

Operating  expenses  per  car  mile,  in  cents 

4.867 

66  65 

Freischt  cars  to  a  train 

4.59 
23.90 

483,712,991 

30.00 
18.00 

38.37 

Tons  of  freight  to  a  train 

Tons  of  freight  one  mile 

From  Annual  Reports  of  railroad  companies,  1891. 

It  will  be  seen  that  on  the  Missouri  Pacific,  revenue  trains  ran 
1.122,067  miles,  or  6.S2  per  cent  more  than  on  the  Pacific  System.  At 
the  same  time  the  cost  to  the  Pacific  System  was  for  ^Dperating  expenses, 
$3,879,267,  or  21.43  per  cent  more;  and  the  cost  of  operating  expenses 
per  revenue  train  mile  was  29.80  per  cent  more  than  on  the  Missouri 
Pacific  lines.  But  these  items  do  not  furnish  a  full  comparison  of  the 
relative  cost  for  the  service  performed,  as  the  operating  expenses  alone 
do  not  indicate  the  work  done,  and  the  train  miles  do  not  show  how 
many  cars  the  trains  hauled,  nor  the  amount  of  traffic  they  carried. 

The  statement  further  shows  that  the  Missouri  Pacific  freight  trains 
hauled  an  average  of  20  cars  to  the  train,  to  15.41  cars  on  the  Pa- 
cific System,  or  an  excess  of  30  per  cent;  and  carried  an  average  of 
160.7  tons  of  freight  to  a  train,  compared  with  136.8  tons  on  the  Pacific 
System.  Considering  the  work  done  by  all  revenue  trains  in  the 
transportation  of  freight,  passengers,  express,  and  mails,  and  that  the 
operating  expenses  are  incurred  in  the  performance  of  this  combined 


—  168  — 

service,  the  natural  basis  of  comparison  for  the  cost  of  the  service  per- 
formed by  a  railroad  is  the  mileage  made  by  cars  in  revenue  trains, 
including  both  freight  and  passenger.  This  affords,  in  fact,  the  only 
fair  and  complete  unit  of  measurement,  as  it  embraces  on  the  one  hand 
the  earnings  from  all  classes  of  traffic  carried,  and  on  the  other  the 
operating  expenses  which  have  been  caused  in  part  by  each  class  of  the 
earnings.  On  this  basis  of  comparison,  then,  the  statement  shows  that 
the  car  mileage  on  the  Missouri  Pacific  exceeded  that  on  the  Pacific 
System  by  67,259,939  miles,  or  37.24  per  cent,  and  at  the  same  time 
that  the  cost  per  car  per  mile  for  operating  expenses  for  the  Pacific 
System  exceeded  that  for  the  Missouri  Pacific  by  4.867  cents,  or  66.65 
per  cent. 

If  the  Missouri  Pacific  were  subject  to  the  conditions  of  operation 
which  prevail  on  the  Southern  Pacific  lines,  the  operating  expenses  of 
that  Kansas  system  would  have  been  increased  4.867  cents  per  car 
mile,  or  the  annual  amount  of  -112,062,714.  This  sum  added  to  the 
present  operating  expenses  would  make  $30,159,666  as  the  operating 
expenses  of  the  Missouri  Pacific  system;  and  as  the  gross  earnings  of 
that  system  amount  to  $25,473,583,  it  would  have  failed  to  pay  its  oper- 
ating expenses  by  $4,686,083,  instead  of  having  earned  a  net  amount  of 
$7,376,631,  as  was  the  case. 

Or,  reversing  the  comparison  and  applying  the  cost  of  the  service  on 
the  Kansas  system  to  the  Southern  Pacific  lines,  the  expenses  of  the 
latter  would  have  been  reduced  by  the  amount  of  $8,789,175.  Thus,  if 
the  conditions  of  operating  here  were  as  favorable  as  in  Kansas,  the 
operating  exj)enses  of  the  Southern  Pacific  lines  would  have  been  less 
than  they  were  by  $8,789,175 — a  sum  which  would  represent  an  annual 
dividend  of  5  per  cent  on  $175,783,500. 

The  data  for  this  statement  is  taken  from  the  annual  reports  of  the 
companies  named.  The  figures  used  represent  with  both  systems  the 
same  items.  The  operating  expenses  are  in  each  case  prepared  under 
the  printed  detailed  rules  prescribed  by  the  Interstate  Commerce  Com- 
mission and  the  State  Railroad  Commissions  of  California  and  Kansas. 
The  principal  causes  of  this  contrast  in  the  operating  expenses  of  the 
two  systems  are  the  following: 

1.  The  large  amount  of  mountain  road  in  California  having  heavy 
grades  and  curves,  requiring  greater  power  to  haul  a  given  load,  or 
requiring  lighter  loads  to  a  train,  compared  with  the  Kansas  system, 
the  roads  of  which  are  comparatively  on  a  level. 

2.  The  greater  voiume  of  traffic  carried  by  the  Kansas  system,  which, 
other  things  being  equal,  reduces  the  rate  of  cost  per  car  mile  or  per 
ton  mile,  as  the  expenses  of  administration,  supervision,  maintenance, 
and  repairs  are  imperceptibly  increased  by  an  increase  of  traffic,  and  the 
more  direct  expenses  of  conducting  transportation  are  not  increased  in 
proportion  to  the  increase  of  business. 

3.  The  greater  cost  of  labor  in  California,  which  has  been  shown  by 
Mr.  Curtis  to_  be  about  30  per  cent,  and  all  material  and  supplies  in 
which  labor  is  an  element  of  production,  including  locomotives,  cars, 
machinery,  rails,  and  all  other  manufactured  articles  which  are  manu- 
factured in  the  Eastern  States  and  have  the  transcontinental  trans- 
portation added  to  their  cost  in  California. 

4.  The  greater  cost  of  fuel  in  California,  making  the  comparative 
cost  for  fuel  consumed  by  locomotives  as  follows: 


I 


169  — 


Year  1S90. 

Cost  for  Fuel. 

Locomotive 
Miles. 

Cost  per  Mile 
Run— Cents. 

Missouri-Pacific  System 

$1,549,797  04 
4,010,254  59 

23,10.5,875 
19,097,178 

0.()9 

Southern  Pacific  Co.,  Pacific  System 

20.39 

If  the  cost  of  fuel  per  mile  run  on  the  Pacific  System  were  as  low  as 
on  the  Missouri  Pacific,  the  cost  of  fuel  consumed  by  locomotives  in  the 
year  named  would  have  been  $1,317,741  20,  as  compared  with  the  actual 
■cost  of  $4,016,254  59.  Or,  if  the  average  rate  for  the  Missouri  Pacific 
were  as  great  as  on  the  Pacific  System,  the  cost  for  fuel  consumed  by 
locomotives  for  the  year  would  have  been  on  the  Missouri  Pacific 
$6,273,318  95,  as  compared  with  the  actual  cost  of  $1,549,797  04. 

Mr.  Leeds  has  suggested  here  that  the  greater  cost  of  coal  on  Southern 
Pacific  lines  is  due  to  that  company's  manner  of  accounting,  in  adding 
to  the  cost  of  coal  transportation  charges  over  the  company's  own  lines. 
This  company's  practice  in  this  respect  is  that  common  to  all  systems 
•consisting  each  of  several  railroads  belonging  to  different  companies. 
To  make  a  proper  accounting  of  earnings  and  expenses  for  each  rail- 
road, materials  shipped  over  one  road  for  use  on  another  of  the  same 
system,  are  charged  with  freight  at  a  nominal  rate  to  cover  the  bare  cost 
of  the  service.  The  same  practice  is  followed  on  the  Missouri  Pacific 
svstem,  as  is  noted  in  the  Annual  Report  of  that  company  for  1891,  page 
104. 

Nor  are  the  results  shown  by  this  comparison  exceptional  or 
peculiar.  A  similar  comparison  between  the  Southern  Pacific  Com- 
pany's lines,  and  the  lines  of  any  other  large  system  in  the  Western 
agricultural  States,  will  give  like  results. 

The  rates  of  cost  per  unit  of  service  for  the  systems  named  are  as 
follows: 


Year  1890. 


Operating 

Expenses 

Per  Car  Mile 

—Cents. 


Excess  of 

Cost  for 

S.  P.  Co.  Per 

Car  Mile — 

Per  Cent. 


Southern  Pacific  Company,  Pacific  System 

Missouri  Pacific  System 

Union  Pacific  Svstem 

A.  T.  and  S.  F.  System.. 

Northern  Pacific  Railroad 


12.109 

7.302 
8.194 

6.884 
8.784 


60.05 
48.51 
70.77 
38.53 


The  rate  of  cost  per  car  mile  for  Southern  Pacific  Company  is  12.169 
■cents;  the  highest  except  this  is  8.784  cents  for  the  Northern  Pacific 
Railroad.  The  difference  in  these  rates  is  3.385  cents  per  car  mile. 
ThuF,  compared  with  the  system  least  in  contrast  with  the  Southern 
Pacific  Company,  the  excess  of  cost  for  operating  expenses  on  this 
•companv's  lines  amounts  for  the  service  performed  to  the  annual  sum 
of  $6,093,000. 

MR.    LEEDS'    STATEMENTS. 


These  facts  are  in  direct  contradiction  to  the  results  reached  by  the 
proponent  of  this  constitutional  amendment,  and  upon  which  the 
tariffs  in    the    amendment  are  justified.     Mr.   Leeds  has  said,  "They 


—  170  — 


(the  Southern  Pacific  Company)  claim  that  operating  expenses  are 
higher  here  than  in  the  East,  owing  to  the  high  price  of  coal;  I  believe 
I  have  shown  that  one  half  the  amount  of  coal  here  provides  the  same 
service  as  in  Kansas." 

And  again,  he  states  the  following  summary  of  his  testimony:  "The 
operations,  earnings  per  mile  of  road,  the  comparison  of  operating  ex- 
penses, the  information  that  California  is  paying  to  this  road  about 
twice  or  more  than  twice  as  much  per  mile  as  is  earned  by  roads  in 
other  portions  of  this  country,  also  the  proposition  that  it  is  no  more 
expensive  here  to  operate  a  road,  or  should  not  be,  than  in  that  terri- 
tory, should  be  quite  sufficient,  it  strikes  me,  and  demonstrates  the 
necessity  for  some  reduction." 

This  summary  of  alleged  facts  deserves  careful  examination,  for  if  it 
contain  errors,  or  facts  irrelevant  to  the  issue,  the  demonstration  would 
fail  and  the  Traffic  Association  amendment  would  rest  only  on  asser- 
tion. The  statement  resolves  itself  into  four  propositions,  which  I  will 
consider  in  turn. 

First — One  half  the  amount  of  coal  here  provides  the  same  service  as 
in  Kansas.  This  is  a  point  of  the  first  importance,  as  the  cost  of  fuel 
is  the  largest  single  item  of  expense  in  the  operation  of  a  railroad.  It 
has  been  shown  by  Mr.  Curtis  that  the  proposition  has  no  foundation 
in  fact,  and  that  it  was  based  on  a  blunder  made  by  Mr.  Leeds  in  his 
calculations.  In  his  comparisons  of  the  relative  economy  in  the  use  of 
coal  on  the  lines  of  the  Southern  Pacific  Company  and  the  East,  Mr. 
Leeds  has  selected  and  has  used  solely  for  the  latter  territory  the  Atchi- 
son, Topeka,  and  Santa  Fe  system.  This  system  operated  on  June  30, 
1892  (Annual  Rep.,  1892,  pp.  10,  11,  69),  7,130  miles  of  road,  including 
in  this  the  Atlantic  and  Pacific,  Southern  California,  and  other  railways, 
aggregating  1,933  miles  in  California,  Arizona,  New  Mexico,  and  Mexico. 
Thus  covering  for  these  part  of  the  same  territories  and  where  the  con- 
ditions are  the  same  as  for  the  Pacific  System  lines.  Had  his  compari- 
sons, therefore,  proven  that  the  cost  of  coal  was  greater  on  the  Atchison 
system  than  on  the  Pacific  System  of  the  Southern  Pacific  Company, 
that  result  would  have  been  irrelevant  in  a  comparison  of  cost  as 
between  California  and  Kansas. 

But  taking  even  the  Atchison  system,  as  quoting  from  the  reports 
and  the  same  pages  as  were  used  by  Mr.  Leeds,  the  results  shown  as  ta 
fuel  are  as  follows  (reports  Atchison,  Topeka,  and  Santa  Fe  Railway 
Company,  1891-92,  page  82;  reports  Southern  Pacific  Company,  189i, 
page  66) : 


A.  T.  &  s.  F. 
System. 


S.  P.  Co.  Pacific 

System. 


Locomotives,  miles  run 

Cost  per  locomotive  mile  run  for  fuel 
Cost  of  coal,  per  ton,  average 


34,383,445 

8.d7  cents. 

$2  11 


20,356,680 

19.12  cents. 

$5  79 


The  total  cost  to  the  Atchison  system  for  fuel  consumed  by  locomo- 
tives was  thus  $2,946,661  23.  The  cost  to  that  company  would  have 
been,  at  the  rate  which  it  cost  the  Southern  Pacific  Company,  19.12 
cents  per  locomotive  mile,  $6,574,114  68,  an  increase  of  $3,627,453  45, 
or  123  per  cent.     In  other  words,  the  fact  is  that  it  costs  to  perform  an 


171  — 


equal  service  on  the  Atchison  system  less  than  one  lialf  as  mnch  for 
fuel  as  it  costs  the  Pacific  System  of  the  Southern  Pacific  Company. 

Second — Comparisons  of  operation  and  expenses  show  that  it  is  no 
more  expensive  here  to  operate  a  road  than  it  is  in  other  portions  of 
this  country.  This  proposition  embraces  also  the  preceding  one,  and  is 
partly  answered  under  that  head.  It  has  been  fully  answered  and 
refuted  by  the  statement  of  Mr.  Curtis.  There  remains,  however,  an 
item  that  deserves  notice,  not  from  its  intrinsic  importance,  but  from 
the  importance  given  to  it  by  the  author  of  the  proposed  amendment. 
]Mr.  Leeds,  in  his  assertions  that  the  cost  of  operating  railroads  in  Cali- 
fornia is  less  than  in  other  portions  of  this  country,  la^'s  special  stress 
and  dwells  at  length  upon  the  percentage  of  operating  expenses  to  earn- 
ings, and  he  argues  that  as  the  percentage  of  operating  expenses  to 
earnings  is  less  as  a  rule  on  the  California  roads  than  on  some  of  the 
Eastern  lines,  it  follows  that  the  cost  of  operation  here  is  less  than 
there.  This  is  not  an  uncommon  fallacy.  But  that  a  railroad  man  of 
Mr.  Leeds'  experience  should  entertain  it,  is  only  explicable  by  his 
statement  before  the  Railroad  Commission  in  the  Shively  case,  that  he 
knew  nothing  about  the  operating  expenses  of  railroads,  his  experience 
having  been  confined  to  the  traffic  department.  The  fact  is  that  the 
percentage  of  operating  expenses  to  earnings  proves  nothing  as  to  the 
cost  of  operation.  It  being  a  ratio  to  the  earnings  depends  as  well  upon 
the  amount  of  earnings  as  unon  the  cost  of  operation.  For  illustration: 
The  gross  earnings  of  a  road  amount  to,  say  -$10,000  a  mile,  and  the 
oi)erating  expenses  $6,000,  or  60  per  cent;  by  a  reduction  in  earnings  to 
$9,000  a  mile,  due  perhaps  to  new  sources  of  competition  and  with  no 
change  in  the  cost  of  operation,  the  ratio  of  expenses  to  earnings  would 
be  increased  from  60  per  cent  to  66.66  per  cent. 

It  is  a  rule  to  which  I  know  of  no  exception  that  the  most  prosperous 
roads,  those  particularly  which  pay  not  only  their  fixed  charges  but 
dividends  to  their  stockholders,  have  the  highest  percentage  of  operat- 
ing expenses  to  earnings.  I  take  at  random  for  illustration  the  follow- 
ing Eastern  lines: 


Name  of  Road. 

Dividends 

Paid— Per 

Cent. 

Percentage   of 
Operating 

Expenses  to 
Earnings. 

Lake  Shore  and  Michicjan  Southern 

5.00 
7.00 
5.50 
4.50 

68.15 

Pittsburg,  Fort  Wayne,  and  Chicago 

6fi.22 

Pennsylvania  Railroad                                         _   

67.94 

New  York  Central  and  Hudson  River  Kailroad 

66.09 

Compared  with  the  dividend  roads,  the  ratio  of  operating  expenses 
on  the  Pacific  System  lines  is  58.93  per  cent.  Yet  none  of  these  Cali- 
fornia lines,  excepting  the  Central  Pacific,  has  ever  paid  a  dividend  to 
its  stockholders.  The  increased  ratio  of  operating  expenses  on  the 
Eastern  roads  named  is  not  due  to  the  greater  cost  of  the  service  of 
operation,  but  on  the  other  hand  is  due  to  the  much  greater  volume  of 
traffic,  which  is  accompanied  by  a  much  cheaper  cost  of  operation,  con- 
sidering the  service  performed,  and  results  in  a  larger  net  profit,  not- 
withstanding their  lower  rates. 

In  contradiction  to  INIr.  Leeds'  conclusions,  it    is    also  true    that  a 


road  Avitli  a  low  perceitage  of  operating  expense  may  be  unprofitable 
to  its  owners  and  be  operated  at  a  high  rate  of  cost  lor  the  service  per- 
formed. For  illustration,  the  Pacific  Coast  Railway  has  shown  that  its 
gross  earnings  for  1891  were  (Report  of  California  Railroad  Com- 
mission, 1891),  $194,034  50;  operating  expenses,  $94,680  87;  ratio  of 
operating  expenses  to  earnings,  49  per  cent.  Notwithstanding  this  low 
percentage  of  operating  expenses,  compared  with  say  the  Lake  Shore 
rate  as  above  of  68  per  cent,  it  costs  to  haul  a  train  a  mile  on  the 
CaHfornia  road  $1  19,  and  on  the  Eastern  road  $1  06,  and  the  traffic  in 
the  train  is  many  times  greater  in  the  latter  case.  (Statistics  of  Inter- 
state Commerce  Commission,  1890,  p.  639.) 

The  percentage  of  ojaerating  expenses  to  earnings  thus  proves  noth- 
ing as  to  the  cost  of  operating  in  one  State  comjDared  with  another 
State,  and  it  has  been  here  demonstrated  that  the  r^sw^is  reached  by  Mr. 
Leeds  in  the  use  of  such  percentages  are  directly  contrary  to  the  facts. 
Notwithstanding  the  lower  ratio  of  operating  expenses  to  earnings  here, 
the  actual  cost  of  operation  is  much  greater  than  in  other  portions  of 
this  country. 

Third — California  is  paying  to  this  road  (the  Southern  Pacific  Com- 
pany) twice  as  much  per  mile  as  is  earned  by  roads  in  other  portions  of 
this  country.  In  this  proposition  Mr.  Leeds  cannot  of  course  mean 
literally  what  he  says,  for  he  must  know  that  some  roads  in  other  por- 
tions of  the  country  earn  per  mile  as  high  as  three  times  as  much  as 
the  Pacific  System.  Compare  for  instance  the  above  mentioned  divi- 
dend paying  roads: 


Gross  Earn- 
ings per  Mile 
of  Road. 


Southern  Pacific  Company,  Pacific  System 

Lake  Shore  and  ^lichigan  Southern 

Pittsburg,  Fort  Wayne,  and  Cliicago 

Pennsylvania  Railroad 

iS'ew  "i  ork  Central  and  Hudson  River  Railroad. 


$8,001  00 
14,437  00 
25,582  00 
26,981  00 
24,457  00 


As  the  Southern  Pacific  gross  earnings  per  mile  are  about  one  third 
that  shown  on  these  roads,  Mr.  Leeds  must  mean  to  confine  his  com- 
parisons to  other  roads.  He  has,  in  fact,  named  the  Atchison  system 
and  the  Missouri  Pacific  system  in  this  connection.  The  fairness  of 
such  comparisons,  or,  in  other  words,  the  truth  of  the  deduction  which 
may  be  obtained  therefrom,  depends  on  the  fulln*ess  of  the  numerous 
other  facts  to  be  considered.  A  high  average  earning  per  mile  indicates 
in_  itself  neither  high  rates  nor  large  profits.  The  largest  earnings  per 
mile,  as  a  rule,  are  received  where  the  rates  are  lowest;  thus  the  Eastern 
roads  above  quoted  have  larger  earnings  and  lower  rates  than  the 
Pacific  System.  And  the  Pacific  System  has  larger  earnings  and  lower 
rates  than  the  other  roads  in  California.  On  the  Pacific  System  it  is  a 
fact,  also,  that  on  those  roads  where  the  earnings  are  largest,  the  rates 
are  the  lowest.  This  results  from  the  common  relation  between  a  large 
traffic  and  low  rates.  Under  natural  conditions,  and  without  arbitrary 
interference,  rates  are  reduced  wherever  it  is  believed  that  it  will  induce 
sufficient  additional  traflic  to  give  on  the  whole  an  increased  net  profit. 
Thus  commodities   which  are   produced  in  the   largest  quantities  are 


—  173  — 

taken  out  of  the  body  of  the  tariff  and  given  special  rates.  This  aj./'it  is 
to  all  the  principal  products  of  this  State.  Applied  to  the  country  Mne 
large,  it  affects  with  the  greatest  force  the  staples  of  life,  and  results  in^ 
the  lowest  rates:  first,  on  the  necessities  of  life,  which  are  consumed 
by  all;  second,  on  the  common  comforts,  consumed  by  a  less  number  and 
to  a  less  amount,  and  third,  to  the  luxuries  of  life,  which  take  the 
highest  rates  and  are  enjoyed  by  the  few.  The  reductions  of  rates,  under 
natural  conditions,  with  the  object  of  securing  an  increase  of  traffic 
with  a  lower  rate  but  a  larger  net  profit,  thus  results  in  the  greatest 
good  to  the  greatest  number.  On  the  score  of  rates  there  is  notliing  ta 
be  feared  here  from  large  gross  earnings  per  mile  of  road.  Where  the 
earnings  are  largest,  the  rates  are  lowest.  For  any  increase  in  earnings 
per  mile  which  the  railroads  may  secure,  the  patrons  of  the  road  and 
the  people  of  this  State  will  be  benefited  to  a  much  greater  degree. 
What  is  wanted  here  is  more  such  roads,  not  discrimination  against 
them  such  as  this  measure  proposes. 

Neither  can  the  profits  of  a  railroad  or  the  reasonableness  of  its  charges 
be  judged  by  the  gross  earnings  per  mile,  nor  by  comparing  this  with  the 
percentage  of  operating  expenses  to  earnings.  There  must  be  considered, 
also,  other  necessary  expenses,  interest  on  the  bonded  debt,  and  a  fair 
return  on  cost  of  the  property.  These  charges  are  all  greater  for  the 
railroads  in  California  than  in  the  States  of  the  Mississippi  Valley,  for 
reasons  similar  to  those  stated  in  explanation  of  the  increased  cost  of 
operation.  The  cost  of  construction  is  much  greater  here  now  than 
east  of  the  Rocky  Mountains.  It  was  still  greater  a  number  of  years 
ago,  when  the  Central  Pacific  w^as  built.  The  characteristics  of  the 
greater  portion  of  California  railroads  are  snowsheds.  trestles,  bridges, 
tunnels,  grades,  and  curves.  Under  equal  conditions  of  cost  for  labor 
and  materials,  the  character  of  the  country  would  greatly  increase  here 
the  cost  of  construction,  compared  with  the  level  plains  of  the  other 
territory  named.  But  it  has  been  shown  that  the  cost  of  labor  and  ma- 
terials here  is  much  greater  than  in  the  East.  Again,  the  use  of  capital 
has  always  demanded  and  still  requires  higher  interest  here.  These  con- 
ditions combined,  greatly  increase  the  actual  necessary  cash  cost  of 
railway  construction  in  this  State  compared  with  the  State  of  Kansas 
and  its  neighbors.  On  these  points,  which  are  paramount,  because 
they  are  necessary  to  consider  before  railroads  can  be  constructed  here, 
Mr.  Leeds  has  offered  no  evidence.  He  has  in  no  case  shown  what 
were  the  profits  of  the  roads  here,  or  whether  the  gross  earnings  afforded 
a  fair  return  upon  the  actual  cash  investment. 

Fourth — These  three  propositions  being  proven,  should  be  quite  suf- 
ficient, and  demonstrates  the  necessity  for  some  reduction.  This  is  Mr. 
Leeds'  conclusion.  With  full  confidence  I  rest  the  judgment  of  the 
proof  of  his  propositions,  and  the  demonstration  he  would  draw  from 
them,  on  the  honesty,  the  justice,  and  the  patriotism  of  this  committee 
and  the  Legislature  of  this  State. 

CAPITALIZATION. 

As  to  the  capitalization  of  the  Southern  Pacific  lines,  Mr.  Leeds  has 
furnished  your  committee  with  the  following  information: 

"The  earnings  of  the  roads  within  the  State  of  California,  including 
the  entire  system  of  the  Southern  Pacific  Company,  were  $9,021  per 


—  174  — 

mile;  that  covers  3,498  miles  of  road;  that  the  interest  on  bonded  debt 
paid'by  the  Pacific  System  on  some  of  that  was  .$8,675,587  42.  I  have 
since  learned  that  the  capitalization  on  that  3,498  miles  of  road  was,  for 
funded  debt,  $144,494,500,  or  $41,305  per  mile;  the  capital  stcck  of  the 
same,  $165,311,300,  or  $47,255  50  per  mile;  and  an  aggregate  capital- 
ization for  the  two,  $88,560  50  per  mile." 

Again,  in  referring  to  these  figures,  he  states:  "That  represents  8,498 
miles  of  railroad  for  which  you  are  expected  to  put  up  the  necessary 
money  to  pay  the  interest  on  capitalization  amounting  to  $309,605,800, 
or  $88,560  average  per  mile."  And  in  another  reference  to  the  subject, 
he  says:  "I  believe  that  the  bonded  indebtedness  of  these  roads  is  very 
much  in  excess  of  the  cost  of  construction." 

Mr.  Leeds'  confusion  of  facts,  errors  of  figures,  and  false  conclusions 
in  these  statements  are  fairly  characteristic  of  the  popular  misinforma- 
tion and  prejudice  which  exist  on  this  subject.  He  confuses  his 
remarks  regarding  the  roads  in  California,  the  entire  system,  the  lines 
covering  the  3,498  miles  of  road,  and  the  interest  on  bonded  debt  "paid 
on  some  of  that;"  so  that  to  understand  his  statements  one  must  refer 
to  the  source  from  which  he  has  derived  them  and  try  to  locate  the 
figures.  From  such  a  reference  to  the  annual  report  of  the  Southern 
Pacific  Company  for  1891,  I  find  ti^at  the  interest  on  bonded  debt 
stated  as  being  "paid  by  the  Pacific  System  on  some  of  that," 
$8,675,587  48,  covers  not  onl}'  some,  but  all  the  Pacific  System  lines 
in  the  States  and  Territories  of  Oregon,  California,  Nevada,  Utah, 
Arizona,  and  New  Mexico.  The  3,498  miles  of  road  includes  the  lines 
operated  by  the  Southern  Pacific  Company  in  California,  Nevada,  and 
Utah.  The  capital  stock  named  covers  these  last-named  lines,  and  in 
addition  thereto  the  242.51  miles  of  the  Atlantic  and  Pacific  Railroad 
between  Mojave  and  The  Needles.  The  bonded  debt  named  is  appar- 
ently intended  to  cover  the  same  lines  as  the  capital  stock,  but  by  an 
error  it  overstates  the  amount  to  the  extent  of  $12,786,000.  Through 
the  error  of  dividing  the  amount  of  capital  stock  by  the  wrong  mileage, 
the  rate  of  capital  stock  per  mile  is  in  error.  Correcting  the  errors, 
both  in  the  wrong  mileage  and  the  wrong  amounts  for  the  bonded  debt, 
it  should  be  reduced  from  $41,305  to  $35,209  per  mile  of  road.  But 
aside  from  the  errors  of  his  figures,  Mr,  Leeds'  statement  that  "you 
are  expected  to  put  up  the  money  to  pay  the  interest  on  capitalization 
amounting  to  $88,560  per  mile,"  is  not  true  in  fact,  and  conveys  a 
grossly  erroneous  impression.  This  sum  (if  not  in  error  as  to  the 
amount)  would  represent  the  issue  of  both  bonds  and  capital  stock  on 
all  lines  operated  by  the  Southern  Pacific  Company  in  California,  and 
the  Central  Pacific  lines  also  in  Nevada  and  Utah.  None  of  these 
California  companies  have  ever  paid  a  dividend  on  their  stock.  This 
stock,  amounting  to  $97,311,390,  has  therefore  no  more  relation  to  the 
past  or  present  earnings  of  the  roads  than  if  not  a  share  of  it  had  ever 
been  issued.  The  only  dividend  paid  by  the  Pacific  System  is  2  )  er 
cent  for  the  Central  Pacific  line.  The  much  greater  portion  of  the 
earnings  of  this  road  are  from  through  traflic,  the  rates  on  which  are 
fixed  by  competition,  and  so  are  entirely  unaffected,  whether  dividends 
are  paid  or  not.  During  the  past  seven  years  the  dividends  paid  for 
this  road  have  only  been  earned  in  one.  Operated  on  its  own  merits 
the  dividends  could  not  have  been  made;  they  were  paid  from  the 
guaranteed  rental  under  the  lease  to  the  Southern  Pacific  Company. 


—  175  — 

As  to  the  bonded  debt  of  these  roads,  Mr.  Leeds  believes  that  "it  is 
very  much  in  excess  of  the  cost  of  construction."  This  is  but  an  extreme 
expression  of  a  common  belief  which  Mr.  Leeds  found  upon  his  advent 
here,  and  adopted  on  hearsay  evidence,  as  he  has  testified  in  the  Shively 
case.  But  like  some  other  forms  of  faith,  investigation  will  show  that 
its  foundation  is  not  on  fact.  There  seems  also  to  be  a  quite  common 
belief  abroad,  that  the  bonded  debt  of  the  Southern  Pacific  Company's 
lines  is  increasing  from  year  to  year,  so  as  to  make  the  interest  charge 
on  them  an  increasing  tax  to  be  collected  from  the  traffic  carried.  The 
following  statement  showing  the  original  and  the  present  bonded  debt 
of  each  of  the  lines  comprising  the  Pacific  System  of  the  Southern  Pacific 
Company,  will  throw  some  light  upon  this  subject: 


Southern  Pacific  Company,  Pacific  System.    Summary  of  Funded  Debt  of  Railroad  Conv- 

panies,  December  SI,  1S92. 

Miles 
of  Road 
Owned. 

Name  of  Issuing  Company. 

Total  Amount  of  Bonds. 

Issued. 

Redeemed. 

Outstanding 

1,741 
390 

Southern  Pacific  Railroad  of  California... 
Northern  Railway 

$54,335,000 

10,111,000 

945,000 

5,500,000 

6,848,500 

$8,398,500 
192,000 

$45,936,500 

9,919,000 

945  000 

54 

Northern  California  Railway 

104 

South  Pacific  Coast  Railway 

5,500,000 
6  825  500 

115 

California  Pacific  Railroad 

23,000 

Total  lines  wholly  in  California 

Central  Pacific  Railroad 

2,404 

$77,739,500 

$8,613,500 

$69,126,000 

1,360 

$74,586,000 

10,000,000 

4,180,000 

17,036,000 

No  bonds. 

No  interest 

charged. 

$15,449,000 

$59,137,000 

10,000,000 

4,180,000 

17  036  000 

393 

Southern  Pacific  Railroad  of  Arizona 

Southern  Pacific  R.  R.  of  New  Mexico 

Oregon  and  California  Railroad 

167 

568 

58 

Oregonian  Railroad 

28 

Port.  &  Will.  Val.    R.   (P.   &  Y.  R.  R.,   ( 
October  1,  1892) ] 

Total  other  lines 

2,574 

$105,802,000 

$15,449,000 

$90,353,000 

Total  Pacific  System 

4,978 

$183,541,500 

$24,062,500 

$159,479,000 

Miles 
of  Road 

Name  of  Issuing  Company. 

Bonds  per  Mile  of  Road 
Owned. 

Reduction 
in  Interest 

Owned. 

Issued. 

Re- 

deemed. 

Out- 
standing 

Charges. 

1,741 
390 

Soiathern  Pacific  Railroad  of  California... 
Northern  Railway 

$31,209 
25,925 

17,500 
52,885 
59,552 

$4,824 
492 

$26,385 
25,433 
17,500 

52,885 
59,352 

$551,760 
32  760 

54 

Northern  California  Railway 

104 

South  Pacific  Coast  Railway 

115 

California  Pacific  Railroad  

200 

58  785 

Total  lines  wholly  in  California 

2,404 

$32,338 

$3,583 

$28,755 

$643  305 

Central  Pacific  Railroad.      .             

1,360 

$54,843 
25,445 
25,030 
30,000 

$11,360 

$43,483 
25,445 
25,030 
30,000 

$1,033,060 

393 

Southern  Pacific  Railroad  of  Arizona 

Southern  Pacific  R.  R.  of  New  Mexico 

Oregon  and  California  Railroad 

167 

568 

58 

Oregonian  Railroad 

28 

Port.  &  Will.  Val.  R.  (P.  &  Y.  R.  R.,  Octo- 
ber 1, 1892) 

Total  other  lines 

2,574 

$41,104 

$6,002 

$35,102 

$1 033  060 

Total  Pacific  System 

4,978 

$36,870 

$4,8.34 

$32,036 

$1,676,365 

—  178  — 

Taking  all  the  lines  that  are  wholly  within  the  State  of  California^ 
which  includes  the  Southern  Pacific  Railroad  of  California,  Northern 
Railway,  Northern  California  Railway,  South  Pacific  Coast  Railway^ 
and  the  California  Pacific  Railroad,  they  comprised  on  December  31, 
1892,  two  thousand  four  hundred  and  four  miles.  The  original  issue 
of  bonds  on  these  roads  amounted  to  $77,739,000,  but  under  the  laws 
of  the  State  of  California  every  railroad  mortgage,  or  all  railroad  mort- 
gages under  which  bonds  are  issued,  must  provide  that  a  sinking  fund 
be  established  for  the  redemption  of  the  bonds,  to  be  paid  entirely  from 
the  income  of  the  road.  The  sinking  fund  has  been  used  with  some  of 
these  roads;  it  is  accumulating  with  others,  and  has  been  used,  although 
there  is  a  large  accumulation  invested  in  these  very  bonds,  although  it 
is  not  shown  here  as  a  reduction.  What  I  wish  to  show  is  that  in  these 
roads  comprising  the  Pacific  System  there  has  been  a  material  reduction 
in  the  amount  of  bonded  debt,  running  along  through  years  of  their 
history,  and  it  has  resulted  in  a  material  reduction  of  the  interest 
charge  on  the  roads,  which  Mr.  Leeds  says  you  are  expected  to  pay. 
Now,  for  the  lines  that  I  have  stated  were  wholly  within  the  State  of 
California,  of  this  $77,000,000  bonds  have  been  redeemed  to  the  amount 
of  $8,600,000,  leaving  outstanding  $69,000,000.  Now,  the  original  issue 
of  these  bonds  averaged  for  all  the  roads  something  over  $32,000  per 
mile;  some  of  them  were  issued  as  high  as  $40,000  per  mile,  some  at 
higher  rates,  and  some  at  $17,500;  but  they  averaged  $32,000.  Since 
then,  by  redemptions,  they  have  been  reduced  so  that  the  present  aver- 
age bonded  debt  of  the  railroads  wholly  within  the  State  of  California — 
the  railroad  companies  w^hose  lines  are  wholly  within  the  State  of  Cali- 
fornia which  are  controlled  by  the  Southern  Pacific  Company — amounts 
to  $28,755  per  mile  of  road.  The  reduction  of  interest,  the  annual 
interest  charge,  which  has  been  efiected  by  the  retirement  of  these 
bonds,  amounts  to  $1,436,000.  Now,  taking  the  lines  of  the  system; 
there  is  the  Central  Pacific,  Southern  Pacific  of  California,  and  of 
Arizona  and  New  Mexico,  the  Oregon  and  California,  and  a  couple  of 
other  little  roads  in  Oregon.  The  total  redemption  of  bonds  for  all 
these  roads  amounted  to  something  over  $24,000,000,  and  the  issue,, 
which  at  the  original  rate,  averaged  $37,000  per  mile  of  road,  has  been 
reduced  to  an  average  of  $32,000;  that  includes  the  high  rate  on  the 
South  Pacific  Coast  Railway,  which  has  only  one  hundred  and  four 
miles  of  road,  and  has  a  very  high  rate  of  issue  per  mile,  owing  to  the 
fact  that  its  principal  properties  are  the  ferries  and  ferry  properties  in 
Oakland,  Alameda,  and  San  Francisco,  so  that  it  is  not  a  fair  way  to 
show  that  rate. 

For  the  California  Pacific  the  average  is  $59,000  per  mile,  owing  to 
the  fact  that  that  road  was  constructed  by  interests  different  from  those 
at  present  controlling  it,  and  at  the  reorganization  it  became  bankrupt, 
and  the  reorganization  was  effected  to  save  the  old  creditors  as  far  as 
possible,  resulting  in  scaling  down  the  interest;  so  they  have  first, 
second,  and  third  mortgages.  Now,  the  third  mortgage  only  pays  S- 
per  cent;  those  are  the  roads  whose  bonds  are  highest  on  the  system, 
not  excepting  the  Central  Pacific,  and  were  issued  before  the  control  by 
the  present  proprietors  over  these  properties. 

EARL:_That  is  the  Napa  Valley  line?  A.  Yes,  part  of  the  Napa 
Valley  line;  but  the  principal  line  is  between  Vallejo  and  Sacramento, 


1 


—  177  — 

*Earl:  Was  that  built  by  the  present  owners?  Was  that  not  built 
through  the  swamp  b}''  the  present  owners?  A.  Yes,  across  the  swamp; 
but  it  has  been  reconstructed,  almost  entirely,  at  great  expense. 

Mr.  Curtis:  Been  reconstructed  three  times? 

Mr.  Lansing:  It  was  washed  out  badly,  as  stated,  three  times.  I 
mention  that  to  show  the  highest  rate.  The  present  proprietors  are 
not  responsible,  and  their  interest  in  this  matter  has  been  to  reduce 
that  rate. 

As  before  stated,  it  will  be  seen  that  for  the  companies  wholly  in 
California,  there  were  on  December  31,  1892,  2,404  miles  of  road,  on 
which  bonds  were  originally  issued  to  the  amount  of  -$77,739,500;  but 
that  of  this  amount  $8,613,500  have  since  their  original  issue  been 
redeemed,  leaving  outstanding  at  the  present  time  $69,126,000,  or  $28,755 
per  mile  of  road.  The  redemption  of  bonds  on  those  roads,  wholly 
within  this  State,  average  for  all  lines  $3,583  per  mile.  For  the  Central 
Pacitic,  both  within  and  without  the  State,  bonds  have  been  redeemed 
to  the  amount  of  $15,449,000,  or  $11,360  per  mile  of  road.  For  all  the 
Pacific  System  lines,  the  bonds  redeemed  amount  to  $24,062,500,  which 
with  such  as  have  been  refunded  at  lower  rates  of  interest,  have  reduced 
the  total  interest  charge  by  the  sum  of  $1,676,365  per  annum.  Tbe 
average  bonded  debt  per  mile  for  the  entire  system,  including  the  Central 
Pacific  Railroad,  is  at  the  present  time  $32,036,  and  for  the  roads  wholly 
in  California,  $28,755.  The  bonded  debt  on  these  lines  and  the  interest 
charged  thereon,  have  thus  not  been  increased,  but  materially  reduced 
during  the  years  of  their  operation.  It  has  been  shown  that  the  cost  of 
construction  for  the  Pacific  System  lines  has  been  much  greater  than 
for  the  roads  of  the  Mississippi  Valley  and  the  East.  This  is  common 
to  all  lines  here,  on  account  of  the  greater  cost  of  labor,  materials,  and 
supplies;  and  has  more  or  less  additional  application  to  each,  due  to  its 
proportion  of  mountain  and  desert  road.  When  these  known- condi- 
tions of  relative  cost  are  taken  into  consideration,  a  comparison  of  the 
bonded  debt  of  railroads  here  and  in  the  East  will  satisfy  an  unbiased 
mind  that  the  cost  of  construction  on  the  Pacific  "System  has  been 
greatly  in  excess  of  the  amount  of  their  bonded  debt. 

In  the  most  thickly  settled  portion  of  our  country,  on  the  Atlantic 
Coast,  the  capitalization  is  the  greatest.  For  the  group  of  States  desig- 
nated in  the  statistical  report  of  the  Interstate  Commerce  Commission 
as  group  2  (reports  1890,  page  46),  which  includes  New  York,  New 
Jersey,  Pennsylvania,  Delaware,  and  Maryland,  the  average  bonded 
debt  per  mile  is  $58,275.  These  roads  also  have  issued  capital  stock  to 
the  amount  of  $51,698  per  mile,  on  52.73  per  cent  of  which  dividends 
are  paid.  The  greater  capitalization  in  this  group  of  States  is  due  to 
the  more  expensive  roadway,  terminal  properties,  and  larger  equipment 
required  to  conduct  their  greater  volume  of  traffic.  An  equal  standard 
of  construction  there  would  cost  much  less  than  here.  Coming  west 
to  a  territory  of  lighter  traffic,  though  greater  than  our  own,  we  find  in 
Kansas  a  standard  no  higher,  and  I  believe  not  so  high  as  that  of  our 
Pacific  System  lines,  with  which  a  comparison  may  be  made  under  con- 
ditions fairly  equal  as  to  the  standard  of  construction,  but  diff'ering 
materially  as  to  the  relative  price  of  labor  and  materials,  and  the  topo- 
graphical features  of  the  country  through  which  the  roads  run. 

The  Railroad  Commission  in  Kansas  seems  by  its  course  in  that  State 
to  have  inspired  the  confidence  of  the  San  Francisco  Traffic  Association 
12 


—  178  — 

and  its  Manager,  so  that  its  testimony  on  this  matter  may  be  quoted 
with  confidence  as  having  at  least  no  undue  bias  in  favor  of  the  rail- 
roads. In  considering  this  subject  of  the  returns  upon  capital  invested, 
in  their  annual  report  for  1890  (p.  20),  they  say:  ''It  is  quite  common 
for  inflated  orators  to  assert  that  from  $8,000  to  $10,000  a  mile  is  all 
that  a  railroad  legitimately  costs,  and  that  all  capitalization  above  that 
is  water.  We  have  an  itemized  statement  of  the  actual  cash  cost  of  1 ,388 
miles,  1.055  being  in  Kansas.  We  refer  to  the  Chicago,  Kansas,  and 
Nebraska  Railroad.  All  of  this  road  was  built  within  the  past  four 
years,  under  most  favorable  conditions  as  to  cost  of  labor  and  material, 
and  built  by  or  under  the  auspices  of  a  company  whose  financial  credit 
was  high,  enabling  it  to  place  securities  upon  the  market  upon  very 
favorable  terms;  yet  the  actual  cost  and  outlav  for  road  and  equipment 
up  to  .June  30,  1889,  was  $29,264,497  33,  or  $21,083  93  per  mile.  There 
is  no  water  in  this. 

"  It  is  true  that  all  the  railroad  mileage  in  the  State  has  not  cost  so 
much  per  mile  as  the  Chicago,  Kansas,  and  Nebraska  line,  but  some 
has  cost  a  great  deal  more.  Railroads  that  are  cheaply  built  in  the 
beginning  cost  more  before  they  are  finished  than  they  would  if  well 
constructed  at  first.  A  railroad  thrown  down  on  the  prairie  at  a  cost  of 
$10,000  or  $12,000  per  mile  is  no  criterion  of  the  cost  of  a  road  over 
which  immense  trains  run  with  safety  thirty  and  forty  miles  an  hour. 

"It  would,  in  our  judgment,  be  a  moderate  estimate  to  put  the  actual 
average  cash  cost  of  the  total  railroad  mileage  of  Kansas,  including 
equipment,  at  the  cost  of  the  Chicago,  Kansas,  and  Nebraska  line,  per 
mile." 

Of  the  roads  over  which  immense  trains  run  with  safety  thirty  or 
forty  miles  an  hour,  which  the  Commission  say  "  cost  a  good  deal  more 
per  mile  "  than  the  average  prairie  road  of  the  State,  I  find  the  follow- 
ing lilies,  with  the  bonded  debt  per  mile  of  road,  issued  on  the  lines  in 
Kansas  (Rep.  R.  R.  Com.  Kas.,  1891,  p.  266): 


Name  of  Road. 


Bonded  I)el>t 

per  Mile  of 

Koad  ill 

Kansas. 


Atchison,  Topeka,  and  Santa  F4  Railway  . 

Missouri  Pacific  Railway 

Missouri,  Kansas,  and  Texas  Railway 

St.  Joe  and  Grand  Island  Railway 

St.  Louis  and  San  Francisco  Railway 

Union  Pacific  Railway 


$32,780  00 
27,S.s.s  (JO 
39,404  00 
34,537  00 
30,143  00 
38,891  00 


The  mean  issue  for  these  principal  lines  in  Kansas  is  $33,940  per 
mile.  With  the  Southern  Pacific  Company  lines  in  California  we  have 
shown  it  to  be  $28,755,  and  for  the  entire  Pacific  System,  including  the 
Central  Pacific,  with  its  mountain  grades,  tunnels,  snowsheds,  and  war 
prices  for  labor,  material,  and  capital,  but  $32,036  per  mile. 

Mr.  Leeds  is  wrong,  Mr.  Chairman,  in  saying,  "You  are  expected  to 
put  up  the  necessary  money  to  pay  the  interest  on  capitalization, 
amounting  to  $88,560  50  per  mile;"  for  the  lines  of  this  company,  which 
are  wholly  in  California,  are  paying  interest  only  at  the  rate  of  $28,775 
per  mile,  and  are  paying  no  dividends.  The  large  capitalization  of  the 
Central  Pacific  is  due  to  the  great  natural  obstacles  which  had  to  be 
overcome  in  the  construction  of  that  road,  and  to  the  much  greater  cost 


—  179  — 

of  labor,  materials,  supplies,  and  equipment,  due  to  construction  in 
time  of  war  and  before  the  completion  of  this  line  had  furnished  the 
present  low  rates  of  transportation  across  the  continent.  The  bond 
issue  was  provided  by  Act  of  Congress,  the  United  States  bonds  being 
based  on  $16,0U0  per  mile  on  the  plains,  $32,000  in  the  foothills,  and 
$48,000  per  mile  crossing  the  Sierra  Nevada  Mountains.  The  company 
was  then  authorized  to  issue  its  bonds  for  the  same  amount.  After 
paying  annually  the  25  per  cent  of  net  earnings  required  under  the 
provisions  of  the  Thurman  Act  into  the  United  States  Treasury,  the 
earnings  of  the  Central  Pacific  lines  are  not  sufficient  to  meet  the  accru- 
ing interest  on  the  issue  of  the  United  States  bonds.  These  bonds  were 
loaned  by  the  Government  to  this  company  in  the  same  way  that  loans 
are  made  by  private  parties  to  the  company  on  the  issue  of  its  bonds. 
They  were  made  payable  in  United  States  currency,  and  accepted  by  the 
company  at  par,  amounting  to  $27,855,680.  interest  on  which  at  6  per 
cent  is  an  annual  charge  to  the  company;  and  it  may  be  of  interest  here 
to  note  that,  during  the  time  of  construction,  all  payments  made  on  the 
Pacific  Coast  were  in  gold,  which  was  then  at  a  high  premium.  In  order 
to  convert  these  bonds  into  gold  to  pay  its  payrolls  and  bills,  the  com- 
pany was  compelled  to  sell  them  for  $20,735,000,  or  at  a  discount  of 
$7,120,000. 

Earl:  Then  it  is  erroneous  to  think  the  Government  put  up  money, 
gold  coin,  to  the  amount  of  the  debt  that  it  holds  against  the  Central 
Pacific?     A.  Yes,  sir. 

Q.  They  put  up  bonds  and  then  took  a  mortgage  to  secure  the  face 
value  of  them  as  a  debt?  A.  The  Government  never  put  up  a  dollar  in 
coin.  They  issued  their  currency  bonds  at  6  per  cent,  and  loaned  the 
bonds  to  the  company  on  condition  that  the  company  should  repay  the 
bonds  with  interest.  They  being  currency  bonds,  and  currency  at  that 
time  being  at  a  great  discount,  everything  here  being  in  gold,  the  com- 
pany had  to  utilize  them  at  a  great  loss. 

Lansing:  I  would  submit  to  the  committee  a  statement  showing  the 
income  from  operations  of  the  Central  Pacific  Railroad  for  the  past  five 
years,  and  each  of  them,  showing  gross  earnings  from  other  sources  of 
income  to  the  company;  that  is,  other  sources  in  connection  with  the 
operations  of  the  property — not  land  sales;  not  for  sales  of  their 
property — the  operating  expenses  and  the  other  charges  which  are 
necessarily  a  charge  against  the  income  of  the  road,  and  which  would 
be  a  legitimate  and  proper  charge  required  from  the  road  before  a  justi- 
fication of  a  reduction  in  its  rates  reducing  its  income  would  be  allowed 
under  the  recent  rulings  of  the  United  States  Courts,  fixing  what  is  a 
reasonable  rate,  or  establishing  the  principle  of  what  is  a  reasonable  rate. 

For  1887  the  gross  earnings  or  income  of  this  line  amounted  to — I 
will  read  in  round  figures — say,  $14,000,000;  the  charges  against  it,  the 
whole  item  of  charge,  a  little  more  than  that. 

In  1888  the  income  was  nearly  $16,000,000,  and  the  charges  about 
$16,500,000. 

In  1889  about  $16,000,000,  and  the  charges  $16,500,000. 

In  1890  the  income  $16,000,000,  and  the  charges  $16,750,000. 

In  1891  it  earned  a  net  of  $478,000. 

For  the  whole  period — five  years — together,  the  result  was  a  net  deficit 
of  $2,228,000.     This  is  without  payment  of  any  dividend;  the  dividend, 


—  160  — 

as  I  have  stated,  being  pa3'able  under  contract  or  lease  to  the  Southern 
Pacific  Company,  and  guaranteed. 

Burke:  What  road  was  that? 

A.  The  Central  Pacific  Railroad.  That  is  the  largest  system  of  lines, 
and,  as  every  one  here  knows,  the  most  important  to  the  Pacific  Coast. 
I  would  like  to  say  something  about  the  Southern  Pacific  Railroad  of 
California.  This  is  probably,  by  a  great  deal,  the  most  important  com- 
pany in  the  State  of  California. 

Burke:  I  am  sorry,  Mr.  Lansing,  that  I  cannot  stay  any  longer,  as  I 
have  a  pressing  engagement. 

Lansing:  It  is  the  mo.st  important  road,  because  it  has  a  greater 
mileage  in  this  State  than  any  other  line;  it  has  about  fifteen  hun- 
dred miles  in  operation,  and  has  in  contemplation  the  construction  of 
about  fifteen  hundred  miles  additional,  making  something  over  three 
thousand  miles  of  road. 

I  have  a  statement  showing  the  growth  of  this  company — showing,  in 
similar  form  to  that  which  I  have  given  for  the  Central  Pacific,  the 
earnings  and  expenses  and  fixed  charges  for  each  of  the  past  five  years, 
which  show  an  increasing  condition  of  prosperity.  This  company  con- 
sists of  a  number  of  lines  that  have  been  consolidated  from  time  to 
time  with  a  view  of  efi'ecting  economy  in  their  operation,  and  of  having 
them  stand  together  as  a  system  to  protect  each  other — for  the  better 
lines  to  help  the  weaker,  and  so  strengthen  their  securities  that  addi- 
tional capital  can  be  secured  for  the  extensions  that  have  been  con- 
templated. 

The  income  has  been  increasing  from  year  to  year,  until  in  1890  there 
was'  a  surplus  of  about  $14,000  out  of  gross  earnings  amounting  to 
$8,896,000.  In  1891  there  was  a  surplus  of  $937,000;  and  in  order  to 
carry  out  the  contemplated  extensions  that  the  proprietors  of  this 
property  have  in  view  in  the  State,  they  amended  their  articles  of  asso- 
ciation, providing  for  quite  a  number  of  new  lines,  making  in  all  about 
fifteen  hundred  miles  proposed  to  be  constructed,  as  I  have  stated. 

I  would  like  to  file  the  amended  articles  of  association,  which  describe 
all  the  lines  and  their  terminal  points.  And  it  was  hoped  and  is  still 
hoped  that  the  increasing  prosperity  would  allow  the  controllers  of  the 
company  to  issue  bonds  on  the  proposed  lines,  or  to  make  a  contract 
with  bankers  for  supplying  them  with  funds  as  the  bonds  were  issued 
on  constructed  road,  and  they  have  laid  their  plans  with  that  object  in 
view. 

For  the  whole  period  of  five  years,  which  I  have  before  me,  there  is  a 
net  deficit  of  $1,765,000;  but  as  I  have  said,  the  latter  portion  of  the 
period  shows  better  than  for  the  former  portion. 

Mr.  Earl:  How  long?     A.  Five  years;  1887  to  1891,  inclusive. 

Now,  the  bonds  which  have  been  issued  by  the  Southern  Pacific  Rail- 
road,_  of  which  this  is  simply  the  continuation,  were  under  conditions 
existing  at  that  time  of  the  cost  of  construction,  and  character  of  the 
road,  and  the  requirements  of  capital,  fixed  at  $40,000  per  mile  at  6  per 
cent.  On  the  lines  which  have  recently  been  constructed,  the  issue  has 
been  limited  to  $22,500  per  mile  at  5  per  cent.  They  have  issued  no  more 
bonds  than  with  the  capital  stock  which  they  pay  in,  on  Avhich  they 
pay  cash,  is  required  to  carry  on  the  work;^that  is  what  has  been 
planned,  and  what  is  hoped  for  the  extension  of  these  lines. 

I  submit  this  statement  also,  with  blue  print  for  a  map,  showing  the 


—  ISl  — 

contemplated  lines  in  dots.  This  i?  the  blue  print  map  that  was  made 
for  the  information  of  the  bankers  interested  in  furnishing  the  capital 
for  the  enterprises. 

[Mr.  Lansing  here  filed  blue  print  and  statement.] 

I  wish  to  say  that  one  branch  of  this  company's  projected  line  is  now 
in  process  of  construction,  running  down  the  coast  from  San  Francisco 
to  Santa  Margarita,  thence  to  San  Luis  Obispo  and  Santa  Barbara;  and 
there  is  a  line  contemplated  crossing  the  mountain  range  separating  the 
coast  from  the  San  Joaquin  Valley;  there  are  a  number  of  lines — 
branch  lines — on  the  coast  and  throughout  the  San  Joaquin  Valley. 

I  wish  to  say  that  there  is  no  question  but,  if  from  the  investigation 
which  we  have  made  into  the  operation  of  this  proposed  constitutional 
amendment,  if  a  California  distance  tariff  of  that  kind  is  imposed  upon 
these  roads,  there  is  no  possibility  of  their  being  constructed  by  the 
present  proprietors,  and  all  work  at  present  on  them  must  cease. 

I  would  like  finally  to  add  a  note  on  the  subject  of  reductions  in 
rates. 

REDUCTION   IN    HATES. 

The  business  of  railroad  transportation  I  hold  to  be  a  legitimate  busi- 
ness, and  one  on  which  the  welfare  of  this  State  in  a  great  degree 
depends.  It  involves  the  control  and  use  of  a  vast  amount  of  capital, 
which  is  of  necessity  a  permanent  investment  in  this  State.  It  cannot 
be  operated  to  the  injury  of  the  State  without  operating  to  its  own 
injury.  The  interests  of  the  communities  which  it  serves  and  the 
patrons  of  its  lines  are  also  its  interests,  and  to  wrong  one  of  these 
would  be  bad  policy,  as  well  as  unlawful.  Such  differences  as  may 
exist  between  the  company  and  its  patrons  as  to  rates  that  are  un- 
reasonable or  discriminations  that  are  unjust,  it  would  be  the  com- 
pany's paramount  interest  to  remedy  if  wrong,  or  rest  the  settlement 
with  a  proper  Commission  or  Court  if  agreement  were  not  otherwise  pos- 
sible. Its  business  can  only  be  prosperous  if  conducted  on  business 
principles.  To  the  best  of  the  judgment  of  its  proprietors  and  officers, 
it  has  been  guided  by  these  principles  in  the  past.  I  believe  the  best 
results  for  all  concerned  will  follow  from  adhering  to  them  in  the 
future,  and  with  the  growing  wisdom  of  experience,  which  is  as  useful 
to  the  railroads  as  to  the  people.  Mr.  Curtis  and  Mr.  Gray  have  illus- 
trated the  remarkable  grow^th  and  development  of  this  State,  and  the 
dependence  of  such  prosperity  on  the  railroads.  I  wish  to  strengthen 
their  testimony  by  showing  the  reductions  which  have  been  made  by 
the  Pacific  System  lines  under  natural  conditions  of  regulation  and 
competition  in  charges  for  the  transportation  of  passengers  and  freight. 

Statistics,  first,  show  the  average  rate  of  charge  for  transportation  of  the 
Pacific  System  lines  in  1872;  for  this  year  the  average  rate  of  freight  per 
ton  per  mile  was  3.66  cents.  In  1891  it  had  been  reduced  to  1.835 
ents.  These  figures  do  not  include  company's  freight.  The  reduction 
luring  this  period  thus  amounts  to  1.825  cents,  or  half  the  entire  rate. 
This  means,  that  if  the  average  rate  of  1872  were  collected  on  the  ton- 
lage  of  the  present  time,  the  freight  earnings  of  18131,  which  were  $21,- 
500,000,  would  have  been  $43,000,000. 

But,  during  this  period  named  of  twenty  years,  great  changes  have 
iffected  these  lines  by  the  construction  of  other  and  competing  trans- 
jontinental  railways,  and  as  both  through  and  local  traffic  are  included 


—  182  — 


in  the  tonnage  shown,  it  may  be  naturally  claimed  that  the  reduction 
is  chieflv  due  to  the  competition  on  the  through  and  does  not  much 
aifect  the  local  traffic  in  the  State.  To  answer  this,  the  statistics  for  the 
past  ten  years  have  been  made  to  show  separately  the  local  tonnage  and 
the  through.  The  following  are  the  statistics  for  both  freight  and  pas- 
senger traffic  for  1881  and  1891,  which  afford  a  more  detailed  compari- 
son for  this  period: 

Freight  Statistics— Southern  Pacific  Company  (Pacific  System). 
(Not  including  company's  freight.) 


Through  Freight. 

Miles  road  operated - --- 

Earnings - 

Tons  carried 

Tons  one  mile.- 

Ton  miles  to  one  mile  of  road 

Average  rate  per  ton  per  mile  (cents) 
Earnings  per  mile  of  road 

Local  Freight. 

Earnings.-- 

Tons  carried 

Tons  one  mile 

Ton  miles  to  one  mile  of  road 

Average  rate  per  ton  per  mile  (cents) 
Earnings  per  mile  of  road 


1891. 


4,625 

$7,972,452 

738,914 

669,634,362 

144,786 

1.190 

$1,724 


$13,536,142 

4,949,142 

502,437,824 

108.6r;5 

2.694 

$2,926 


2,707 

$3,423,499 

309,329 

259,684.517 

95.931 

1.318 

$1,265 


$12,418,640 

1,862,712 

373,170,214 

137,854 

3.328 

$4,588 


Increase  or 
Decrease. 


*1,918 

*  4,548,953 

*429,585 

*409,949,845 

*48,So5 
+0.128 
*$459 


*$1.117,502 

*3,086,430 

*129,267,610 

+29.219 

+0.634 

+$1,662 


Per  Cent. 


70.85 
130.28 
138.89 
157.8 

50.93 
9.71 

36. 


9.00 
165.6 
34.64 
21.20 
19.05 
36.23 


'Increase,    f  I'eerease. 

Passenger  Statistics — Pacific  System,  Southern  Pacific  Company. 


1881. 


Increase  or  Decrease. 


Amounts.       Per  Cent. 


Through  Passengers. 

^Miles  of  road  operated 

Earnings 

Passengers  carried 

Passengers  carried  one  mile 

Passenger  miles  to  one  mile  of  road 

Average  rate  per  passenger  per  mile 

(in  cents) 

Earnings  per  mile  of  road 

Local  Passengers. 

Earnings 

Passengers  carried 

Passengers  carried  one  mile 

Passenger  miles  to  one  mile  of  road 

Average  rate  per  passenger  per  mile 

(in  cents) 

Earnings  per  mile  of  road 


4,625 

$2,793,295 

163,517 

136,625,120 

29,540 

2.04 
$603  95 


$8,538,485 

17,701,359 

387,057,215 

83,688 

2.21 
$1,846  16 


2,707 
$2,048,090 

77,998 
63,721,671 

23,540 

3.21 
$756  56 


$4,644,7.38 

6,884,936 

145,106,283 

53,604 

3.20 
$2,543  38 


*1,918 

*$745,205 

■    *85,519 

*72,903,449 

*6,000 

+  1.17 
+$152  61 


*$3,893,747 

*10,816,423 

*241,950,932 

*30,084 

+0.99 
+$697  22 


63.43 

36,.39 

109.64 

114.41 

25.49 

36.45 
20.00 


83.83 
157.77 
166.74 

56.12 

30.94 
27.40 


•Increase,    f  Decrease. 

It  will  be  seen  that  for  the  past  ten  years  the  through  freight  show 
a  reduction  in  average  rate  of  .128  cents,  or  9.71  per  cent,  while  th 
local  rate  has  been  reduced  .634  cents,  or  19.05  per  cent.  With  passen- 
ger traffic  there  has  been  a  reduction  in  the  average  rate  on  through  of 
1.17  cents,  or  36.45  per  cent,  and  with  local  an  almost  equal  rate,  or  .99 
cenls,  or  30.94  per  cent. 


i 


—  IbS  — 

If  the  average  rates  of  1881  had  been  collecterl  on  these  road?  on  the 
traffic  of  1891,  it  would  have  increased  the  earnings  of  the  latter  year 
by  the  following  amounts: 


Through  freight  earnings 

Through  passenger  earnings 

$853,328  89 
1,598,513  90 

Total  through 

$2,451,842  79 

Local  freight  earnings.       .          .      

$3,184,988  78 
3,831,866  42 

Local  passenger  earnings 

Total  local 

7,016,855  20 

Total  reduction. 

$9,468,698  99 

There  have  thus  been  greater  redactions  affecting  the  local  traffic 
during  the  ten  years  past  than  there  have  been  for  through.  This  has 
been  caused  by  following  the  conservative  and  wise  policy  of  develop- 
ing the  resources  and  building  up  the  territory  local  to  the  company's 
lines.  As  there  is  no  State  which  during  the  past  ten  years  has  shown 
a  more  prosperous  growth  than  that  of  California,  so  I  believe  there  is 
no  system  of  railroads  in  this  country  that  has  made  concessions  and 
reductions  in  its  local  rates  aggregating  so  great  an  annual  sum. 


VOLUME    OF    TONNAGE, 

At  a  recent  meeting  of  this  committee,  Mr.  Martin  informed  the  com- 
mittee and  the  proponent  of  the  resolution  that  the  proposed  California 
Distance  Tariff  for  freight  rates  was  not  the  same,  but  was  materially 
lower  than  the  Kansas  Distance  Tariff.  This  fact,  thus  for  the  first  time 
being  made  public,  was  acknowledged  by  Mr.  Leeds  in  a  published 
interview  in  the  San  Francisco  "  Examiner  "  of  February  3d,  where  he 
says: 

"  Martin  has  commented  on  the  fact  that  my  rates  are  much  lower 
than  those  in  the  Kansas  Distance  Tariff.  I  admit  that  such  is  the  case. 
I  intended  that  such  should  be  the  case.  The  Kansas  roads  have  not  so 
much  tonnage  per  mile  as  is  the  case  here." 

The  last  sentence  is  intended  as  a  justification  by  Mr.  Leeds  of  the 
lower  tariff  for  California.  If  it  were  true  (and  other  things  were 
equal),  it  would  be  a  strong  argument  for  such  a  difference,  for  it  is  a 
fact  with  which  all  railroad  men  are  familiar  that  an  increase  of  tonnage 
can  be  carried  by  a  road  without  a  corresponding  increase  of  expense. 
So  the  roads  under  the  regulation  of  natural  conditions  study  to  reduce 
their  rates  where  there  is  a  fair  premise  that  the  traffic  will  be  thereby 
increased  in  sufficient  volume  to  produce  a  larger  net  result.  If,  on 
the  other  hand,  it  should  prove  that  the  volume  of  tonnage  is  greater 
on  the  Kansas  lines  than  in  California,  such  fact  would  afford  an  equal 
argument  in  justification  of  higher  rates  here.  Indeed,  laying  aside  the 
facts  which  have  been  proven  as  to  the  excessive  cost  of  operations  in 
California,  and  admitting  for  the  sake  of  argument  that  the  service  of 
transportation  costs  no  more  here  than  in  Kansas,  this  factor  of  the 
volume  of  tonnage  is  of  sufficient  importance  in  itself,  that  if  it  is  found 
to  be  less  on  the  Southern  Pacific  Company's  lines  than  on  the  Kansas 
systems,  to  condemn  the  California  Distance  Tariff  in  its  application  to 
tiie  lines  of  this  company  as  unfair  and  unjust.     This  is  the  comparison 


—  184  — 

which  Mr.  Leeds  invites.  Now,  what  are  the  facts?  The  following 
data,  covering  all  the  principal  railroad  systems  in  Kansas,  and  for  those 
having  the  largest  traffic,  is  taken  from  the  report  of  the  Railroad  Com- 
mission of  that  State  for  1891  (p.  301). 

The  corresponding  data  for  the  Pacific  System  of  the  Southern  Pacific 
Company  is  taken  from  the  annual  report  of  that  company  for  1891 
(p.  68). 

Mr.  Lanstng:  So  that  the  average  in  California,  taken  by  itself,  is  a 
little  lower  than  for  the  Pacific  System,  and  the  Pacific  System  is  93.00 
ton  miles  lower  than  Kansas,  or  37  per  cent  lower  than  the  roads 
in  Kansas,  which  I  have  mentioned;  those  roads  are  not  confined  to  the 
State  of  Kansas,  but  include  the  systems  running  in  and  out  of  the 
vState,  like  the  Missouri  Pacific. 

Earl:  And  what  is  the  average  reduction,  as  shown  by  the  California 
Distance  Tariff,  from  the  rates  prescribed  in  the  Kansas  Distance  Tariff ? 
20  per  cent,  you  say  in  your  opening  statement.  A.  Mr.  Leeds 
stated  that  applied  to  the  local  business  of  California,  as  I  under- 
stand him,  that  his  first  statement  was  25  or  30  per  cent,  that  is  on  the 
local  business;  but,  applied  to  the  total  business,  amounted  to  something 
like  21  per  cent. 

Earl:  No,  I  don't  mean  that.  I  mean  this:  You- say  that  you  have 
calculated  the  average  reduction  shown  by  the  California  Distance 
Tariff  with  reference  to  the  Kansas  Distance  Tariff — you  yourself  had, 
and  you  found  the  average  to  be  about  20  or  25  per  cent?  A.  No;  you 
misunderstood  me. 

Earl:  Well,  then  I  guess  it  was  Mr.  Smurr,  perhaps. 

Mr.  Smurr:  Ranges  from  10  to  31  per  cent. 

Lansing:  It  is  hard — in  fact,  impossible — to  make  a  correct  estimate 
of  the  effect  of  a  tariff  of  that  kind  upon  the  whole  tonnage  of  a  road. 
We  have  to  apply  it  to  the  various  commodities  in  such  a  way  that  it 
takes  a  great  deal  of  time  and  labor  to  make  it  up,  so  that,  as  Mr. 
Smurr  has  applied  it  to  the  different  classes  as  closely  as  he  can,  it  gives 
a  different  rate  for  the  different  classes.  Then  the  effect  upon  the  •whole 
revenue  would  depend  upon  what  the  volume  of  traffic  in  each  of  those 
classes — the  proportion — was  to  the  whole.  It  is  very  material;  that  is 
sufficient. 

The  following  statement  shows  the  volume  of  tonnage  of  the  Pacific 
System  lines'in  each  State  and  Territor}',  and  the  proportion  of  through 
and  local  in  each  case.  This  is  an  interesting  document,  and  verifies 
the  fact  which  I  have  stated,  that  for  the  California  lines,  the  volume 
of  tonnage  is  less  than  for  other  lines.  For  instance,  in  California,  the 
proportion  of  through  you  will  see  the  explanation  in  that,  is  103,000 
tons;  while  in  Nevada  the  through  was  409,000  tons,  and  Utah  411,000 
tons,  that  is  larger  than  the  whole  average  of  California;  taking  the 
through  and  the  local  in  this  State,  it  is  only  59,000  and  55,000 
respectively,  and  so  in  Arizona,  the  average  for  through  is  216,000, 
and  for  New  Mexico,  214,000,  which,  added  to  the  local  they  have 
there,  makes  a  higher  total  average  for  the  line  in  those  "^  desert 
territories  than  the  average  in  California,  when  it  is  applied  to  all  the 
little  branch  lines  of  the  system  in  this  State:  * 


I 


185  — 


STATEMENT    SHOWING    VOLUME    OP    TONNAGE. 
Pacific  System,  Southern  Pacific  Company  vebsus  Kansas  System. 


Mileage. 

Tons— Rev. 
freight  one  mile. 

Tons  one  mile, 
per  mile  of  road. 

A.  T.  &.  S.F 

0.  B.  ct  Q 

4,582.12 
5,284.25 
3,408.56 
670.60 
3,176.82 
1,670.36 
1,326.93 
1,821.86 

1,456,057,989 

1,645,74.5,417 

l,082.22;i,;;92 

405,362,003 

877,751,584 

585,272,713 

357,170,350 

1,209,224,850 

317,588 
311,440 
317,492 

C,  R.  I.  &  P.... 

K.  C,  Ft.  S.,  &  M 

605,605 

Mo.  Pac... 

M.  K.  &  T 

276,282 
351,1.50 

S.  L.  &  S.F 

284,224 

U.  P 

663,673 

Total - - 

21,941.50 
4,625.17 

7,618,808,298 
1,172,072,186 

347,225 

Pa.  System,  S.  P.  Co 

253,421 

These  figures  include  only  revenue  tonnage.  It  will  be  seen  that  the 
volume  of  tonnage  for  the  Pacific  System  averages  253,421  tons  per  mile 
of  road,  compared  with  the  average  for  the  Kansas  lines  of  347,225  tons 
per  mile,  and  that  the  volume  of  tonnage  here  is  93,804  tons  per  mile, 
or  37  per  cent  less  than  with  the  Kansas  lines.  From  these  facts  it 
follows  that  the  Kansas  Distance  Tariff,  if  reasonable  to  the  railroads 
there,  would  be  unreasonable  here,  and  Mr.  Leeds'  tariff  being  still  lower, 
would  be  still  more  unjust  if  applied  to  this-  State. 

But  the  volume  of  tonnage  above  quoted  is  the  average  for  all  Pacific 
System  roads,  including  those  in  Oregon,  Nevada,  Utah,  Arizona,  and 
New  Mexico,  as  well  as  those  in  California.  It  has  been  intimated  here, 
and  would  be  readily  believed  unless  one  were  familiar  with  the  traffic, 
that  the  California  luies  had  a  much  greater  volume  of  tonnage  than  those 
in  the  other  States  a  id  Territoriesfciamed.  This,  however,  is  not  the  fact. 
The  larger  number  of  small  local  branch  lines  in  California,  compared 
with  the  main  trunk  lines  of  which  the  mileage  of  the  other  States  and 
Territories  is  compose!,  with  the  exception  of  the  State  of  Oregon, 
reduces  the  volume  of  tonnage  in  this  State  to  238,090  per  mile  of 
road,  compared  with  267,084  for  the  remaining  roads. 

The  following  statement  shows  the  volume  of  tonnage  for  the  Pacific 
System  lines  in  each  S:ate  and  Territory,  and  the  proportion  of  through 
and  local  in  each  case: 


Territory. 

Tlirough 
Freight- 
Ton  Miles. 

Local 
Freiuht- 
Ton  Miles. 

Total- 
Ton  Miles. 

•California 

103,072 
409,102 
411,418 
17,205 
216,921 
214,755 

135,018 
69,(152 
55,168 
35,397 
67,461 
98,857 

238,090 

Nevada 

478,154 

Utah. 

466,586 

•Oregon 

52,602 

Arizona 

284,382 

!New  Mexico 

313,612 

Average 

143,843 

208,855 

105,422 

58,229 

253,421 

Average,  California  excepted 

267,084 

•Earf.:  Will  you  file  those  statements  with  the  committee? 
Mr.  Lansing:  Yes,  I  will  file  all  of  them. 

Earl:  I  hoped  to  see  some  one  of  the  Traffic  Association  with  us — 
Colonel  Barry — or  some  one  to-night,  so  as  to  fix  a  time  to  adjourn  to. 


—  1S6  — 

Martin:  I  understood  Mr.  Barry  to  say  that  he  was  going  to  attend 
the  meetings  from  this  time  on,  and  he  would  liave  something  to  say 
when  we  got  through. 

Earl:  So  I  understood.  I  am  at  a  loss  to  set  a  time  for  the  next 
hearing  on  account  of  the  Traffic  Association  not  being  represented 
here  to  suggest  an  hour  and  time  that  will  be  convenient. 

Martin:  I  hope  that  whatever  hearing  may  be  had,  that  sufficient 
notice  may  be  given  so  that  we  may  be  represented  here.  Of  course,  we 
cannot  get  here  in  a  day;  we  ought  to  have  sufficient  notice. 

Earl  (to  clerk):  Send  for  Senator  Gesford. 

Earl:  Mr.  Lansing,  have  you  a  duplicate  coj^y  of  any  of  this  matter 
that  you  have  presented  here  this  evening? 

Lansing:  Yes,  I  have,  but  not  here;  I  can  furnish  you  a  duplicate. 

Earl:  Could  you  furnish  me  a  duplicate?     A.   Yes,  sir. 

Earl:  About  when?     A.  Think  I  could  send  it  to  you  to-morrow. 

Earl:  Senator  Gesford,  the  hour  of  adjournment  has  arrived,  and  we 
would  like  to  know  what  time  w^ould  be  satisfactory  to  yourself,  as  pro- 
ponent of  this  measure,  and  the  Traffic  Association,  for  you  to  meet 
again,  when  any  statement  that  Mr.  Barry  would  like  to  make  and 
yourself,  can  be  made. 

Gesford:  Any  time  will  suit  me  after  Thursday.  You  are  a  member 
of  that  other  committee,  and  I  suppose  you  will  be  engaged  there  for 
two  or  three  evenings,  and  probably  we  can't  reach  this  till  the  latter 
13art  of  the  week. 

Earl:  It  is  getting  so  late  in  the  session  it  seems  too  bad  to  defer  it; 
but  we  will  be  too  busy  in  that  committee  to-morrow  night  and  the  next 
night,  and  possibly  any  other  night;  would  say  Monday;  next  Monday 
night. 

Gesford:  Next  Monday  night;  thatVould  be  agreeable. 

Earl:  Very  well;  the  committee  stands  adjourned  until  next  Monday 
night,  at  7:30;  either  to  meet  at  this  place  or  down  stairs.  Depart- 
ment Two;  you  will  ascertain  from  the  Sergeant-at-Arms — Monday 
night,  7:30  o'clock. 


Monday  Evening,  February  13,  1893. 

Mr.  Earl:  Committee  will  come  to  order.  Mr.  Martin,  at  the  last 
sitting  of  the  committee  did  the  Southern  Pacific  Company  finish  its 
showing? 

Mr.  Martin:  Yes,  sir;  we  finished  everything  we  have  to  say. 

Mr.  Earl:  Is  there  any  one  else  that  desires  to  be  heard?  Colonel 
Barry? 

Mr.  Barry:  In  deference  to  the  notice  that  has  been  taken  of  the 
mere  suggestion  on  my  part  that,  representing  the  Traffic  Association, 
I  desire  to  present  a  written  statement  of  Mr.  Leeds',  in  so  far  as  he 
could  make  one,  answering  what  has  been  testified  to  or  suggested  by 
way  of  argument  to  the  committee  before  he  departed.  I  say  I  simply 
made  that  suggestion,  but  apparently  more  heed  was  given  to  it  than  I 
exi)ected,  and  more  than  was  anticipated  on  the  part  of  the  Trathc 
Association — because  the  committee  was  apparently  inconvenienced  by 
my  absence  at  the  last  meeting. 

This  has  been  a  source  of  regret  to  me,  because  the  committee  has- 


—  187  — 

been  very  courteous  not  only  to  representatives  of  the  Traffic  Asso- 
ciation, but  to  every  one  who  has  appeared  before  them,  and  I  know 
the  pressing  duties  of  legishition  weigh  on  you  all  the  time,  and  you 
cannot  devote  all  of  this  session  to  this  one  particular  subject.'  I 
therefore  desire  to  say  to  you  that  it  was  a-bsolutely  unavoidable  on  my 
part,  and  further  that  there  was  nothing  to  indicate  at  the  previous 
meeting  of  the  committee  that  the  case  would  be  closed  at  this  time. 

Now,  I  desire  very  briefly  to  say  a  few  Avords  myself  after  I  shall 
present  what  is  the  real  main  object  of  my  appearance  before  you,  the 
communication  written  by  Mr.  Leeds  prior  to  his  departure  for  the  East 
on  business  of  even  equal  importance  to  the  State  of  California  as  the 
consideration  of  this  subject.  It  was  by  no  means  the  result  of  falter- 
ing on  the  part  of  the  Traffic  Association  or  loss  of  confidence  on  the 
part  of  Mr.  Leeds  in  this  Legislature,  or  inability  to  comprehend  the 
momentous  question  presented  to  you  as  the  representatives  of  the 
State  of  California  that  caused  him  to  depart  in  the  midst  of  this  dis- 
cussion. But  there  are  many  sides  to  the  methods  of  relieving  the 
State  of  California  from  the  oppression  of  the  railroad  corporations 
that  have  a  monopoly. 

There  are  many  methods  of  relief,  other  than  by  abolishing  this  Rail- 
road Commission,  and  establishing  a  maximum  tariti",  even  on  the  lines 
of  the  Kansas  or  any  other  traffic  lines.  There  are  other  methods  of 
relief  coming  outside  of  competing  railroads,  even  by  the  use  of  that 
great  natural  highway  which  God  gave  the  State  of  California,  and 
Avhic'h  if  the  Central  Pacific  Railroad  did  not  prevent  it,  would  have 
made  us  a  happy,  prosperous,  and  wealthy  community.  The  establish- 
ing of  a  competing  steamsliip  line — the  natural  use  of  the  water,  which 
so  long  the  Central  Pacific  Railroad  Company  has  prevented  the  State 
of  California  from  enjoying  the  benefit  of — that  was  the  subject  in  the 
judgment  of  the  Traffic  Association,  and  also  the  judgment  of  Mr. 
Leeds,  their  representative,  the  importance  of  which  caused  him  to 
depart;  and  unless  there  should  be  any  question  about  the  absolute 
confidence  of  the  Traffic  Association  in  Mr.  Leeds,  and  the  absolute 
interest  it  feels  in  this  measure  and  all  measures  that  will  give  relief  to 
the  oppressed  industries  of  California,  I  desire  to  present  to  the  com- 
mittee, with  its  permission,  a  duly  attested  resolution  of  the  Traffic 
Association,  expressing  its  confidence  in  Mr.  Leeds,  and  indicating  that 
in  every  respect  he  has  carried  out  their  wishes  in  this  regard.  I 
will  not  read  it,  because  it  has  already  appeared  in  the  public  press, 
Mr.  Chairman,  and  therefore,  I  will  hand  it  to  the  clerk. 

[Mr.  Barry  here  handed  the  resolutions  referred  to,  to  the  clerk.] 

Now,  therefore,  having  expressed  these  preliminary  observations,  I 
desire  to  say  that  it  is  necessar}^  to  a  proper  understanding  of  this  com- 
munication of  Mr.  Leeds,  that  from  his  enforced  departure,  not  the 
full"  st  and  amplest  answer  could  be  made  to  those  suggestions  daily 
made  here  since  his  absence.  It  will  be  obvious  to  the  committee  that 
his  answer  therefore  can  only  go  into  those  general  principles  and 
those  general  ideas,  anticipatory  to  any  special  information  that  might 
be  brought  before  the  committee  after  his  departure;  and  I  say  for  him, 
as  also  is  my  own  idea,  that  it  was  not  necessary  for  a  comprehension 
of  this  question  to  have  the  time  of  this  committee  taken  up  with  this 
bill  from  roads  that  had  a  purely  speculative  interest  in  it — roads  not 
directly  affected  by  this  tariff'  regulation  at  all,  and  who  speak    simply 


—  188  — 

for  the  purpose  of,  and  with  the  view  of  occupying  the  time  of  this  com- 
mittee and  confusing  tliis  issue. 

Nor  is  it  necessary,  Mr.  Chairman  and  gentlemen  of  the  committee, 
to  a  full  understanding  of  the  fact  that  something  must  be  done  for 
California,  in  the  way  of  giving  her  reasonable  railway  facilities;  it  is 
not  necessary  to  comprehend  that  the  clamor  of  the  people  is  not  with- 
out cause,  to  become  thoroughly  conversant  with  railroad  matters  in 
every  item  and  detail,  as  is  the  knowledge  of  those  who  have  made  it 
their  lifetime  study;  it  is  not  necessary  for  this  committee,  in  the  brief 
space  of  time  allotted  to  ii,  to  go  outside  the  question  presented  in  this 
constitutional  amendment,  and  take  up  the  time  with  matters  that  may 
be  better  understood  and  appreciated  if  the  legislation  outlined  in  this 
constitutional  amendment  ever  comes  before  the  people  of  the  State  of 
California.  Much  of  it  would  be  proper  and  necessary  if  the  Legis- 
lature two  years  from  now — the  Railroad  Commission  having  been 
abolished — should  be  confronted  with  the  question  of  having  to  estab- 
lish railroad  rates  of  fares  and  freights  by  means  of  a  schedule  to  be 
adopted  and  enforced.  Therefore,  with  these  preliminary  remarks,  I 
will  read  the  communication,  as  follows: 

Office  of  the  Traffic  Association  of  California,^ 
San  Francisco,  February  4,  1893.  \ 

Hon.  Guy  C.  Earl,  Chairman  Committee  on  Constitutional  Amendments, 
Sacramento,  CaL: 

Dear  Sir:  It  has  become  necessary  for  me  to  go  East  on  business 
M'hich,  in  its  nature,  is  imperative,  ;i'  d  which  will  render  it  irajDOSsible 
for  me  to  appear  before  your  comn  ittee  ia  person  to  further  urge  the 
merits  of  Senate  Constitutional  Amendment  No.  8,  introduced  by  Senator 
Gesford  on  January  11th,  and  now  pending  before  your  committee.  I 
therefore  beg  tliat  you  grant  me  the  privilege  of  submitting  some  of  the 
points  I  would  desire  you  to  consider  in  writing.  Before  I  enter  upon 
the  subject  I  want  to  mention  a  report  which,  it  appears,  has  been  given 
some  currency  (evidently  by  the  opponents  of  the  measure),  to  the  effect 
that  there  is  a  difference  of  opinion  between  myself  and  the  Executive 
Committee  of  the  Traffic  Association  as  to  the  methods  adopted  in  our 
work,  and  with  particular  reference  to  this  amendment,  which  is  under- 
stood to  be  inspired  by  the  said  association.  I  desire  to  say  that,  so  far 
as  I  am  aware,  there  is  not  a  dissenting  member  of  the  committee,  and 
I  assert  here,  that  I  am  in  full  sympathy  with  the  movement;  and 
further,  that  there  has  never  been  a  time  since  the  organization  of  the 
association  when  the  committee  have  been  more  unanimous  than  at  this 
time.  If  there  is  a  dissenter,  the  fact  has  not  been  developed  in  any  of 
the  deliberations  of  the  committee.  I  therefore  pronounce  all  such 
reports,  from  whatsoever  source,  as  false  in  their  entirety.  I  refer  to 
this  matter  only  because  of  the  possible  effect  it  might  haVe  upon  your 
committee  or  the  legislators  who  will  be  called  upon  to  consider  this 
amendment.  With  reference  to  the  abandonment  of  the  conflict  (in  the 
way  of  legislation)  with  the  railroad  monopoly  of  California  by  the 
Traffic  Association  or  by  myself,  there  is  at  this  time  no  intention  of 
such  a  course,  as  time  will  doubtless  prove. 

This  amendment,  as  at  present  before  your  committee,  contains  vir- 
tually all  of  the  principles  which  were  set  forth  in  the  original  draft; 


—  189  — 

the  alterations  in  details  have  been  arrived  at  after  consideration  with 
Senator  Gesford  and  others,  as  defects  were  pointed  out,  and  it  would  be 
strange  if  none  were  found  in  a  measure  allecting  the  whole  transporta- 
tion interest  of  the  State.  The  amendment,  as  it  now  stands,  is  entirely 
practicable.  I  assure  you  that  in  the  use  of  it  the  plan  of  a  distance 
tariff,  as  a  general  basis,  is  no  experiment.  Outside  of  Central  and 
Northern  California  the  use  of  distance  tariffs,  made  upon  practically 
the  same  plan  as  the  one  submitted,  is  almost  as  universal  as  railroad 
transportation.  I  know  of  no  other  exception  to  the  rule.  It  certainly 
possesses  the  merit  of  equity,  in  that  the  practice  of  discriminations 
between  shippers  and  between  places  are  less  liable  to  occur,  and  are 
more  difficult  for  the  carrier  to  conceal;  besides  it  insures  at  least  a 
reasonable  rate  to  all  shippers,  which  it  can  be  easily  demonstrated  is 
not  true  of  California  at  this  time.  It  enables  a  manufacturer  to  estab- 
lish a  business  at  any  point  without  first  going  into  partnership  Avith 
the  carrier.  It  also  admits  of  the  development  of  the  resources  of  one 
point  as  well  as  another,  even  though  the  carrier  may  be  an  interested 
party,  and  under  present  conditions  discriminating  as  between  points 
and  individuals. 

The  plan  of  introducing  this  tariff  into  the  organic  law  of  the  State 
I  admit  is  an  innovation,  and  has  been  the  source  of  some  ridicule  on 
the  part  of  the  opposition,  but  I  desire  to  say  that  ridicule  is  not 
argument,  and  they  have  not  been  able  to  show  that  it  is  unconstitu- 
tional. The  plan  certainly  possesses  the  merit  of  placing  the  carrier  in 
the  position  of  supplicants  for  legislation  (instead  of  obstructionists), 
provided  that  changed  conditions  of  a  road  under  the  operation  of  the 
law  may  show  it  to  be  necessary;  my  view  of  the  measure  being,  that 
its  operations  upon  a  road  earning  over  $4,000  per  mile  would  be  arbi- 
trary only  until  the  following  term  of  the  Legislature  if  by  chance 
they  in  the  pieantime  earned  less.  The  fundamental  principle  being, 
that  the  Legislature  shall  fix  the  rates  of  charges  of  all  roads  in  the 
State  at  all  times.  That  the  maximum  rule  shall  apply  only  to  roads 
which  earn  more  than  14,000  per  mile.  That  this  tariff  shall  cease  to 
be  operative  on  all  roads  in  the  State  as  soon  as  the  Legislature  shall 
have  performed  the  duty  imposed  upon  them  under  the  Constitution  as 
amended.  I  hold  further,  that  by  the  adoption  of  any  tariff  of  uniform 
application  to  the  roads  of  the  State,  at  least  as  much  time  as  the  period 
at  which  this  tariff  could  become  effective,  until  the  following  Legisla- 
lature  would  be  necessary  to  develop  the  full  effect  of  its  operation  upon 
the  roads,  and  the  commerce  in  the  territory  in  which  it  is  applied. 

The  plan  of  putting  the  Western  Classification  in  effect  in  this  State 
and  making  it  practically  a  part  of  the  organic  law  of  the  State,  has 
been  subject  to  some  criticism,  and  some  ridicule  has  been  indulged  in 
by  some  of  the  opponents,  because  reference  is  made  to  J.  T.  Ripley, 
Chairman.  This,  however,  refers  to  the  title  only,  and  is  to  make  the 
description  of  the  document  perfect  and  unmistakable.  As  to  the  merits 
of  the  classification,  I  will  say  the  universal  use  of  it  in  all  of  the  States 
and  Territories  west  of  Chicago  and  the  Mississippi  River,  California 
included,  except  the  Southern  Pacific  Company's  roads  in  the  central  and 
northern  portions  of  the  State,  also  that  they  use  it  on  through  traffic 
on  all  portions  of  their  system  of  the  road,  ought  to  constitute  a  reason- 
able assurance  that  California  could,  with  a  reasonable  degree  of  safety, 
accept  it,  in  lieu  of  such  documents  as  are  at  present  in  use,  particularly 


—  190  — 

as  there  is  no  reason  why  exceptions  to  it  may  not  be  made  where  it  is 
found  to  be  too  high,  and  it  is  hardly  probable  that  the  people  would 
suffer  any  material  damage  by  reason  of  its  being  too  low.  There  is 
also  another  reason  why  it  should  be  adopted.  You  now  have  m  effect 
in  the  State  three  classifications,  the  Western,  and  the  two  (so-called) 
local  classifications  of  the  Southern  Pacific  Company,  all  of  them  gov- 
erned by  widely  different  rules.  The  free  business  intercourse  between 
different  portions  of  the  country  require  as  uniform  rules  and  classifi- 
cation as  it  is  practicable  to  have  (1  refer  to  the  local,  or  State  traffic), 
and  it  is  well  known  that  it  would  only  be  practicable  to  adopt  the 
Western,  for  universal  application,  if  the  convenience  of  the  carriers  is 
at  all  considered,  as  no  one  except  the  Southern  Pacific  Company  would 
think  of  using  the  locals  now  in  use  by  them;  they  have  been  the  sub- 
ject of  criticism  and  ridicule  in  railroad  circles  for  many  years.  Objec- 
tion will  be  urged  that  the  adoption  of  that  classification  for  a  period 
of  two  years,  arbitrarily,  and  that  the  changes  made  by  the  Classifica- 
tion Committee  will  interfere  with  its  use  here  unless  such  changes 
are  adopted  currently. 

It  must  be  borne  in  mind  that  those  changes  may  apply,  as  now,  on 
through  traffic,  and  that  there  has  never  been  any  common  rule  or 
similarity  between  the  classifications  in  effect  in  the  State  and  those  in 
use  on  through  traffic;  hence  the  grounds  of  such  an  objection  cannot 
be  well  taken.  As  to  necessary  changes  to  meet  the  local  requirements 
of  the  tradd  in  the  State,  it  does  not  appear  that  the  State  Board  of 
Railroad  Commissioners  have  been  especially  industrious  in  their  re- 
visions of  classification  or  the  rules  governing  the  same.  I  believe  I 
■would  be  borne  out  by  the  facts  if  I  were  to  state  that  no  Commission, 
since  the  organization  of  the  Board  some  fourteen  years  ago,  has  ever 
revised  a  classification  or  actually  made  a  tariff'  without  the  assistance 
or  the  guidance  of  the  road  which  was  to  use  it.  All  of  the  tariffs  and 
classifications  which  I  have  examined  since  I  came  to  the  State  bear 
pretty  conclusive  evidence  in  their  general  characteristics  of  such  super- 
vision. In  general  use  the  changes  in  classification  in  what  may  be 
called  staples — such  as  agricultural  products,  staple  groceries,  machiner}- 
(such  as  is  in  common  use),  implements,  hardware,  and  iron  goods — 
have  not  been  ver}"  frequent  or  cry  arbitrary.^  It  is  certain  such 
technical  objections  are  only  rai&ed  for  the  purpose  of  obstructing 
progress  on  this  amendment,  especially  when  viewed  in  comparison 
with  the  past  methods  of  California  roads.  There  would  be  no  great 
necessity  to  make  classification  changes  within  the  jaeriod  of  the  arbi- 
trary application  of  this  classification  as  provided. 

The  Western  Classification  is  used  over  such  an  extended  territory, 
that  it  covers  about  all  conditions  of  commerce,  there  being  about  five 
thousand  articles  named  in  it,  and  it  will  be  found  that  many  of  the 
changes  are  made  to  meet  the  requirements  of  manufacturers  and  would 
not  materially  affect  this  State,  which  for  good  reasons  has  made  no 
very  rapid  strides  in  manufacturing.  Some  reference  has  been  made  to 
my  recent  advent  in  this  State  as  a  reason  why  I  am  not  prepared  to 
recommend  a  proper  tariff  for  use  in  the  traffic  of  California.  I  believe 
I  had  a  fair  knowledge  of  the  general  principles  of  tariffs  and  the 
rules  which  apply  to  the  handling  of  traffic,  before  that  period,  and 
have  made  a  pretty  diligent  study  of  the  conditions  and  requirements 
here  since  then.     I  believe  the  recommendations  which  have  been  made 


—  191  — 

by  the  introduction  of  this  amendment  are  reasonable  to  the]niblic  and 
just  to  the  carriers;  it  has  been  our  purpose  to  present  only  such  a  propo- 
sition. I  have  been  supplied  with  what  pur{)orts  to  be  a  comparison  of 
the  proposed  tariff  and  the  existing  tariii'of  the  San  Francisco  and  North 
Pacific  Railroad.  I  have  examined  that  tariff  in  the  light  of  the 
annual  report  of  that  road,  and  find  that  the  lowest  class  named  in 
their  alleged  tariff  would  yield  a  higher  rate  per  ton  per  mile  than  the 
earnings  reported  in  their  report  to  the  State  Board  of  Railroad  Com- 
missioners. They  may  have  such  a  publication,  but  it  is  evident  they 
do  not  use  it  in  their  business,  hence  the  introduction  of  it  as  evidence 
before  your  committee  is  a  deception  and  is  insincere.  No  business 
which  is  at  all  dependent  upon  the  item  of  transportation  could  exist 
under  such  a  tariff  as  the  one  which  is  submitted  by  them. 

The  rate  per  ton  per  mile  as  reported  by  them  as  earned  in  the  year 
1891  is  abnormally  high,  it  being  in  the  aggregate  over  four  and  a 
quarter  cents  per  ton  per  mile;  and  it  is  not  strange  that  there  is  not 
development  enough  along  the  road  to  justify  a  reduction  below  such  a 
figure — a  slight  advance  would  naturally  kill  off  that  which  must 
now  exist  under  extreme  difficulty. 

I  have  been  furnished  with  a  comparative  statement  of  replacement 
of  cross  ties  which  was  presented  before  your  committee.  AVhile  the  state- 
ment shows  that  the  tie  lasts  at  least  two  years  longer  in  California,  the 
comparison  is  an  unfair  one,  and  the  party  who  presented  it  evidently 
selected  the  roads  which  he  did  for  that  reason.  In  the  first  i)lace,  I 
suppose,  he  informed  your  committee  that  the  roads,  except  the  San 
Francisco  and  North  Pacific,  belong  to  the  same  system.  They  run 
through  large  areas  of  the  finest  timber  in  the  country;  a  great  deal 
■of  it  oak  of  the  finest  quality,  and  I  presume  nothing  but  white  oak 
ties  are  used,  and  by  reason  of  its  location  on  the  road  and  much  of  it 
more  remote  from  market  than  some  other  white  oak  districts,  ties  are 
very  cheap  and  of  the  very  best  quality  to  be  had  east  of  the  Pacific 
Coast. 

By  taking  time  to  digest  the  different  arguments  set  up  by  the  roads 
(if  life  were  long  enough  to  do  so),  they  will  either  be  found  distorted, 
like  their  capitalization,  or  based  on  false  premises,  or  upon  purely 
technical  grounds,  introduced  for  no  other  purpose  than  delay,  and  to 
envelop  the  question  in  a  cloud  of  mystery  too  indefinite  to  be  clearly 
comprehended  by  any  one  except  by  those  whose  trade  it  is  to  obstruct 
legislation,  that  they  may  continue  to  oppress  the  people.  It  is  good 
evidence  of  the  utter  insincerity  of  these  roads  to  look  back  upon  the 
history  of  the  past,  with  reference  to  all  of  their  dealings  with  the  public 
in  every  department  of  their  organization. 

It  ought  to  be  enough  to  know,  if  their  own  figures  are  taken  as  a 
guide,  their  earnings  are  nearly  double  those  of  other  roads  in  the 
country  which  meet  their  obligations;  and  further,  that  their  own 
figures  show  they  consume  from  ten  to  twenty  per  cent  less  of  their 
gross  earnings  in  the  operation  of  the  property,  and  their  net  earnings 
within  California  are  largely  in  excess  of  other  States  on  their  own 
properties,  and  largely  in  excess  of  other  roads.  It  has  been  repeatedly 
shown  in  evidence  in  the  Courts  and  elsewhere,  that  the  roads  of  the 
Southern  Pacific  Company  were  bonded  largely  in  excess  of  the  whole 
cost  of  the  property  and  equipment — that  not  only  did  the  capital  stock 
represent  no  tangible  investment,  but  as  a  matter  of  fact  the  promoters 


—  192  — 

put  into  their  own  pockets  a  large  profit  upon  the  building  of  the  roads,, 
but  still  retain  possession  of  them,  and  have  the  hardihood  to  set  up 
the  claim  that  they  should  have  a  profit  from  the  operation  of  the 
property  in  which  they  have  not  now — nor  did  they  ever  have — a  dollar 
of  actual  investment. 

I  hope  your  committee  will  look  at  results,  and  not  at  the  technical 
methods  introduced  in  order  to  conceal  the  actual  state  of  facts.  You 
are  called  upon  to  pay  a  rate  of  transportation  which  will  yield  an 
income  on  a  funded  debt,  aggregating  $41,305  per  mile,  and  pay  a  divi- 
dend on  a  capital  stock  of  147,255  per  mile,  on  roads  which  in  actual 
outlay  did  not  originally  cost  more  than  one  third  the  amount — if 
honestly  constructed — and  which  can  be  duplicated  to-day,  and  fully 
equippe"d  ready  for  traffic,  for  a  much  less  figure.  And  this  is  not  all — 
you  are  asked  to  contribute  to  the  support  of  their  poor  relations,  the 
non-paying  property  in  the  outlying  States  and  Territories;  and  then, 
I  understand,  their  attorney,  Mr."  Martin,  has  suggested  the  propriety  of 
a  profit  from  the  operation  of  the  property,  the  expenses  of  which  are 
paid  out  of  current  receipts,  and  in  which  the  Southern  Pacific  Com- 
pany have  not  one  dollar  of  invested  money. 

Possibly  if  it  were  found  that  it  were  not  proper  for  them  to  put  on 
a  percentage  or  commission  for  the  operation  of  the  roads,  there  might 
be  a  compensating  factor  in  the  profits  of  the  Pacific  Improvement 
Company,  the  nominal  assets  of  which  have  been  reported  to  be 
$200,000,000  or  more.  I  hope  your  committee  will  not  allow  your  minds 
to  be  diverted  from  these  governing  facts  by  the  small  technical 
objections  raised,  as  they  are  simply  subterfuges.  It  makes  no  ditference 
as  to  the  details  of  how  the  operating  expenses  are  made  up,  whether 
an  item  costs  $1  or  $2,  so  long  as  the  aggregate  proves  that  the 
premises  upon  which  they  argue  are  false. 

Consider  the  burden,  if  you  please,  which  they  seek  to  lay  upon  this 
State,  at  least  two  thirds  of  which  is  unjust,  and  represents  absolutely 
nothing  which  was  ever  invested,  and  then  turn,  if  you  please,  to  the 
lately  completed  road  of  the  Great  Northern  Company,  which  is  said 
to  have  a  funded  debt  obligation  of  twenty -four  thousand  dollars  per 
mile,  and  it  will  be  apparent  that  this  State  is  expected  to  assume  a 
burden  of  more  than  a  thousand  dollars  per  mile  of  road  annually 
more  than  will  be  necessary  to  meet  the  obligation  of  the  Great  Northern 
Company,  and  consider  what  are  the  prospects  for  immigration  to  Califor- 
nia as  against  Washington  and  Oregon.  Lack  of  time  prevents  a  further 
argument  by  me  of  this  question,  except  to  say  that  the  basis  of  four 
thousand  dollars  per  mile  is  a  very  liberal  allowance  as  exemption  from 
the  application  of  the  proposed  tariff.  A  majority  of  the  small  inde- 
pendent lines  of  the  whole  country  it  will  be  found  earn  less  than  that 
amount,  and  yet  meet  their  obligations,  while  many  of  them  have  a 
surplus  afterward,  being  conclusive  evidence  that  the  whole  argument 
against  the  four  thousand  dollar  limit  is  based  on  false  premises.  I 
would  further  state  that  in  none  of  the  States,  so  far  as  I  am  aware  of  now, 
where  rates  are  fixed  by  law,  is  any  exception  made  in  favor  of  the  local 
roads,  while  in  almost  all  cases  conditions  of  comy^etition,  either  between 
carriers  or  upon  commodities,  renders  it  necessar}^  for  them  to  compete 
with  the  larger  systems  of  road.  I  submit  reference  to  a  few  of  the 
smaller  roads,  hurriedly  selected,  and  without  any  effort  to  secure  those- 
which  favor  the  argument  I  desire  to  set  up.     They  are  as  follows: 


—  193  — 

Louisville,  Evansville,  and  St.  Louis,  359  miles;  gross  earnings,  |3,975  36  per  mile;  oper- 
ating expenses,  64.38  per  cent. 

Louisville,  New  Albany,  and  Corydon,  12.5  miles;  gross  earnings,  $1,244  per  mile;  oper- 
ating expenses,  65  per  cent. 

Chicago  and  Fort  Madison,  45  miles;  gross  earnings,  $556  70  per  mile;  operating  ex- 
penses, 80  per  cent. 

Chicago,  Iowa,  and  Dakota,  26^^  miles;  gross  earnings,  $1,577  per  mile;  operating 
expenses,  90  per  cent. 

Chicago,  Kansas  City,  and  Texas,  20  miles;  gross  earnings,  .$1,.343  per  mile;  ojierating 
expenses,  85  per  cent. 

Cincinnati,  Georgetown,  and  Portsmouth,  42  miles;  gross  earnings,  $1,645  80  per  mile; 
operating  expenses,  80  per  cent.     Paid  interest  on  bonds  and  had  .'t;36  19  balance. 

Cleveland  and  Marietta  Railroad,  104  miles;  gross  earnings,  $3,430  57  per  mile;  ojierat- 
ing  expenses,  71.11  per  cent.  Paid  all  obligations,  interest  on  bonds,  and  had  surplus 
$42,623  02. 

Such  examples  can  be  produced  without  limit,  where  the  business  is 
done  on  a  legitimate  basis  and  with  a  view  to  development  of  the  resources 
of  the  country  served  by  them. 

Notwithstanding  technical  objections  raised  by  those  opposed  to  this 
measure,  as  to  the  practicability  of  the  scheme,  I  will  say  the  plan,  so 
far  as  the  tariti'  goes,  is  nominally  the  same  as  is  in  general  use  in  the 
territory  where  there  is  much  less  discrimination  than  is  practiced  here 
in  California,  and  with  a  disposition  on  the  part  of  the  carriers  to  put 
in  effect  an  intelligible  system  of  tariff,  the  plan  will  work  admirably. 

There  has  been  no  argument  advanced  by  the  carrier  up  to  this  time 
which  shows  any  sincere  desire  on  his  part  to  treat  this  question  equit- 
ably, nor  can  any  be  produced  Avhich  will  show  that  the  present  basis  is 
equitable,  nor  can  any  be  produced,  because  equity  is  not  one  of  the 
elements  which  enter  into  the  present  plan  upon  which  the  transporta- 
tion business  is  conducted  in  this  State.  Time  forbids  an  argument  of 
the  case  of  the  Commission.  I  will  only  say  they  have  failed  utterly  in 
the  performance  of  their  obligation  in  every  particular  as  provided  by 
the  law.  So  far  as  can  be  discovered  they  have  done  absolutely  nothing 
which  has  amounted  to  anything,  which  has  not  been  submitted  to  them 
for  ratification  by  the  carriers.  The  system  is  certainly  wrong  which 
admits  of  a  possibility  of  such  dereliction  of  duty  by  any  servant  of 
the  people. 

Very  respectfully, 

J.  S.  LEEDS. 

CAPITALIZATION  PACIFIC  SYSTEM, 

Exclusive  of  the  Oregon  lines;  also  excluding  the  United  States  Government  obligations  of  the 

Central  Pacific. 

Southern  Pacific  of  California,  1,474.54  miles. 

Funded  debt  (bonds) .i;47,.375,000  00,  or     $32,128  67  per  mile. 

Capital  stock 65,135,300  00,  or       44,173  30  per  mile. 

Total ..-.$112,510,300  00,  or     $76,301  97  per  mile. 

California  Pacific,  115.44  miles. 

Bonds $6,825,.500  00,  or     $59,126  00  per  mile. 

Capital  stock 12,000,000  00,  or     103,950  00  per  mile. 

Total $18,825,500  00,  or   $163,076  00  per  mile. 

Northern  Railroad  of  California,  390.38  miles 

Bonds $9,919,000  00,  or     $2.5,408  00  per  mile. 

Capital  stock 12,89(3,000  00,  or       33,026  00  per  mile. 

Total... $22,815,000  00,  or     if58,434  00  per  mile. 


—  194  — 

South  Pacific  Coast,  104  miles. 

Bonds  - $5,500,000  00,  or     $52,884  00  per  mile. 

Capital' stock""!- -'-"I-' - 6,000,000  00,  or       57,092  00  per  mile. 

Total $11,500,000  00,  or   $110,576  00  per  mile. 

Northern  California  Railroad,  53.6  miles. 

Bonds  $94.5,000  00,  or     $17,600  00  per  mile. 

Capital  stock"."".'-'.'-"-"-"-' - 1,280,000  00,  or 23,835  00  per  mile. 

Total - $2,225,000  00,  or     $41,433  00  per  mile. 

Central  Pacific  (Exclusive  of  Government  obligation),  1,360.26  miles. 

Bonds  -  $7.3,930,000  00,  or     $54,.349  00  per  mile. 

Capitalstock'-  — ".* 68,000,000  00,  or       50,000  00  per  mile. 

Total - • - $141,930,000  00,  or  $104,349  00  per  mile. 

Southern  Pacific  of  Arizona,  388.10  miles. 

Bonds  - $10,000,000  00,  or     $2.5,773  20  per  mile. 

Capital  stoc'k" 19,995,000  00,  or       51,.5.33  50  per  mile. 

Total - $29,995,000  00,  or     $77,306  70  per  mile. 

Southern  Pacific  of  New  Mexico,  171.06  miles. 

Bonds - $4,180,000  00,  or     $24,444  00  per  mile. 

Capital"  stock -      6,888,800  00,  or       40,285  00  per  mile. 

Total. — $11,088,800  00,  or     $64,729  00  per  mile. 

Total  Capitalization  (Exclusive  of  Oregon,  Arizona,  and  New  Mexico),  3,498.24  miles. 

Bonds.. $144,494,-500  00,  or     $41,305  00  per  mile. 

Capital  stock 165,311,300  00,  or       47,255  50  per  mile. 

Total .$.309,805,800  00,  or     $88,560  50  per  mile. 

Same  Excluding  Central  Pacific,  2,1.38  miles  (all  California). 

Bonds... - $70,.564,500  00,  or     $33,005  00  per  mile. 

Capital  stock .- 97,311,300  00,  or       45,515  00  per  mile. 

Total - -'.$167,875,800  00,  or     $78,520  00  per  mile. 

New  Mexico  and  Arizona  Combined,  559.16  miles. 

Bonds - - $14,180,000  00,  or     $2.5,.366  72  per  mile. 

Capital  stock - 26,888,800  00,  or       48,092  68  per  mile. 

Total $41,068,800  00,  or     $73,459  40  per  mile. 

Southern  Pacific  of  California— earnings,  $9,279,822  50  ($6,611  54  per  mile);  net,  $3,851,- 
547  85;  operating  expenses,  58.50  per  cent. 

California  Pacific— earnings,  $1,528,747  72  ($13,242  79  per  mile);  net,  $759,525  09;  oper- 
ating expenses,  50.31  per  cent. 

Northern  Railway  of  California— earnings,  $2,914,444  34  (.$7,465  66  per  mile);  net,  $1,375,- 
131  31;  operating  expenses,  .52.82  per  cent. 

South  Pacific  Coast— earnings,  $1,107,772  87  ($10,651  66  per  mile);  net,  $393,807  54;  oper- 
ating expenses,  64.45  per  cent. 

Northern  California  Railway— earnings,  $95,824  26  ($1,787  68  per  mile);  net,  $8,333  49; 
Ofjerating  expenses,  91.30  per  cent. 

Central  Pacific— earnings,  $16,629,104  36  ($12,244  76  per  mile);  net,  $7,407,-354  90;  oper- 
ating expenses,  .55.40  i)er  cent. 

Southern  Pacific  of  Arizona  and  New  Mexico— earnings,  $3,077,947  58  (.$5,506  16  per 
mile);  net,  $1,023,-322  84;  operating  expenses,  66.75  per  cent. 

Oregon  Roads— earnings,  $2,302,650  24  ($3,502  87  per  mile);  net,  $390,118  80;  operating 
expenses,  83.06  per  cent. 

Pacific  System,  except  Oregon,  Arizona,  and  New  Mexico — 3,498.24  miles. 

Southern  Pacific  of  California 

California  Pacific. 

South  Pacific  Coast. 


—  li)a  — 

Northern  Itailway  of  California— earnings,  |31,5o5,71tj  Uo  ($y,U2u  45  per  mile);  net, 
^l>i,bUo,/UO  18;  operating  expenses,  56.25  per  cent. 

Northern  California.  f 

Central  racitic. 

Kame,  excluding  Central  Pacific— 2,138  miles. 

Southern  I'acilic  of  California. 

California  I'acitic. 

South  Pacific  Coast— earnings,  $14,926,611  69  ($6,981  57permile);  net,  $6,388,345  28;  oner- 
atuijj  expenses,  57.20  per  cent. 

Northern  Pail  way  of  California. 

Northern  California. 

Whole  Pacific  System— earnings,  $37,010,078  16  ($7,856  10  per  mile);  net,  $15,201,282  94; 
operating  expenses,  59  per  cent. 

Atlantic  and  Pacific  System,  6,375.53  miles— earnings,  $50,449,815  88  ($7,913  07  per  mile); 
net,  $19,286,203  94;  operating  expenses,  61.77  per  cent. 

Comparison:  Atchison,  TopeKa,  and  Santa  Fe  Railroad  Co.,  7,124  miles— earnings, 
$36,438,188  97  ($5,114  57  per  mile);  net  operating  expenses,  $11,227,255  15;  69.19  per  cent! 
Missouri  Pacific  Co.— ($4,965  81  per  mile);  operating  expenses,  70.96  per  cent. 

Rate  per  Ton  per  Mile. 

Southern  Pacific  Company,  Pacific  System,  through  freight  ..1.119  cents  per  ton  per  mile. 

Southern  Pacific  Company,  Pacific  System,  local  freight 2.699 cents  i)er  ton  per  mile. 

Southern  Paciiic  (Company,  Pacific  System,  all  freight .1.835 cents  per  ton  per  mile! 

Local  226.6  per  cent  of  through  or  more  than  two  and  a  quarter  times  as  much. 

Atchison,  Topeka  and  Santa  Fe  System,  all  freight 1.219  cents  per  ton  per  mile. 

Atchison,  Topeka  and  Santa  Fe  SVstem,  difference 616 

Missouri  Pacific  System,  all  freight 1.024  cents  per  ton  per  mile. 

Missouri  Pacific  System,  difference 811 

Engine  Statistics. 

Miles  run  per  ton  of  coal.  Southern  Pacific  Company 29.74  miles;  cost  per  ton,  $.5.79 

Miles  run  per  ton  of  coal,  Atchison,  Topeka  and  Santa  Fe.  26.12  miles;  cost  per  ton'    2!ll 

Miles  run  per  ton  of  coal,  Missouri  Pacific 25.43  miles;  cost  per  ton!    L35 

Tons  of  freight  carried  per  train,  Southern  Pacific  Company.. 124.63  tons. 

Tons  of  freight  carried  per  train,  Atchison,  Topeka,  and  Saiita  Fe 118.84  tons! 

Tons  of  freight  carried  per  train,  Missouri  Pacific 161.18  tons! 

Pounds  of  coal  used  by  road  per  mile  run  by  locomotive,  Southern  Pacific  Co !    5b  Rs! 

Pounds  of  coal  used  by  road  per  mile  run  by  locomotive,  Atchison,  Topeka,  and 

Santa  Fe ._ 108  lbs. 

Pounds  of  coal  used  by  road  per  mile  run  by  locomotive,  Missouri  Pacific h^  lbs! 

Gross  cost  of  coal  to  Southern  Pacific  Co... $3,300,890  58,  or  8.9  per  cent  of  gross  earnings' 

Gross  cost  of  coal  to  A.,  T.  it  S.  F.. 2,858,402  24,  or  7.8  per  cent  of  gross  earnings! 

Percentage  of  empty  to  loaded  cars  moved,  Southern  Pacific  Company 24.79  per  cent. 

Percentage  of  empty  to  loaded  cars  moved,  Atchison,  Topeka  &  Santa  Fe.  28.32  per  cent! 

Passenger  Rates. 

Southern  Pacific  Company,  exclusive  of  ferry  and  suburban,  per  mile.. 2.50  cents. 

Atchison,  Topeka,  and  Santa  Fe,  exclusive  of  ferry  and  suburban,  per  mile..   2.39  cents! 

Distance  traveled,  Atchison,  Topeka,  and  Santa  Fe 65.91  miles! 

Distance  traveled,  Southern  Pacific  Company.. G8.2    miles! 

Average  receipts  per  passenger.  Southern  Pacific  Company $1  704 

Average  receipts  per  passenger,  Atchison,  Tojieka,  and  Santa  Fe 1  57 

Southern  Pacific  Company,  ferry  and  suburban  number  of  passengers  carried  in  one 
year,  11,84.5,443— earnings,  $1,121,763  4,5.  Average  distance  traveled  by  each  passenger, 
9.6  miles;  average  receipts  for  each,  9.47  cents. 

Local  passengers,  Southern  Pacific  Company,  pay  2.73  cents  per  mile,  excluding  ferry, 
suburban,  and  through. 

Interest  paid  on  funded  debt,  Southern  Pacific  Company,  Pacific  System,  $8,675  587  42- 
funded  debt,  $144,494,500,  or  $41,.305  per  mile  of  road.  '  ' 

Now,  Mr.  Chairman,  there  was  a  document  prepared  by  !Mr.  Leeds 
summarizing  and  placing  in  condensed  form  the  figures  wliich  he  used 
in  his  opening  statentient  to  the  committee,  and  which  has  been  filed 
with  your  Secretary,  but  I  have  a  separate  copy  here,  and  if  the  mem- 
bers of  the  committee  care  to  have  it,  outside  of  the  Secretary,  I  shall  be 
happy  to  afford  it  to  you. 

!Mk.  Earl:  When  was  that  filed? 

Mr.  Barry:  It  was  some  time  before  Mr.  Leeds'  departure  for  the 
East.     Mr.  Kavanagh  received  it,  I  think,  and  lest  it  may  be  mislaid, 


—  jy6  — 

I  take  the  liberty  of  replacing  it.  The  items,  the  figures,  the  facts,  are 
summtirized  by  Mr.  Leeds,  if  I  may  direct  the,  attention  of  the  commit- 
tee to  it,  as  to  the  funded  debt  and  capital  stock  of  the  various  branches 
of  the  Southern  Pacific  system,  and  showing  the  capitalization.  Your 
committee  remembers  the  figures  that  were  read  before  you,  and  their 
intent,  for  instance: 

The  Southern  Pacific  of  California,  distance  1,474.54  miles,  has  a 
funded  debt  of  $32,128  67  per  mile,  and  has  a  capital  stock  of  $44,173  30. 

Now,  the  California  Pacific,  with  115.44  miles,  has  bonds  (not  read- 
ing the  aggregate,  but  simply  the  amounts  per  mile)  of  $59,126  per  mile, 
and  a  capital  stock  to  the  extent  of  $103,950  per  mile,  making  a  total 
capitalization  for  each  mile  of  that  road  of  $163,076. 

The  Northern  Railroad  of  California,  390.38  miles,  has  capitalization 
of  $54,434  per  mile. 

The  South  Pacific  Coast,  which  was  obtained  from  Senator  Fair,  has 
now,  under  the  administration  of  the  Southern  Pacific  Company,  a  capi- 
talization of  $110,576  per  mile.  It  is  hardly  necessary  to  say  that 
Senator  Fair  never  received  any  price  like  that  per  mile  for  his  road. 

The  Northern  California  Railroad  is  capitalized  at  $41,433  per  mile. 

The  Central  Pacific,  exclusive  of  th-^^  Government  obligations,  of  the 
mortgages  of  the  Government,  should  the  necessity  arise  of  paying  back 
some  of  its  indebtedness  to  the  Government,  has  a  capitalization  of 
$104,349  per  mile. 

The  Southern  Pacific  of  Arizona,  388.10  miles,  has  $77,306  77  capi- 
talization. 

The  Southern  Pacific  of  New  Mexico,  171.06  miles,  has  a  capitali- 
zation of  $64,729  per  mile. 

A  total  capitalization,  exclusive  of  Oregon,  New  Mexico,  and  Arizona, 
and  covering  a  distance  on  this  system  of  3,498  miles,  and  which  is  the 
one  w^e  so  often  refer  to,  has  $88,560  50  per  mile  for  this  system  of  roads. 

Excluding  the  Central  Pacific,  the  capitalization  would  be  $78,520 
per  mile. 

New  Mexico  and  Arizona  combined,  with  a  distance  of  559.16  miles, 
has  a  capitalization  of  $73,459  40. 

The  earnings,  briefly,  are  as  follows: 

The  Southern  Pacific  of  California  earns  nine  millions  and  over, 
which  is  an  aggregate — w^hich  is  an  average  per  mile  of  $6,611,  as  gross 
earnings.  Its  net  earnings  for  the  whole  distance  are  $3,851,547,  and 
its  operating  expenses  are 

(These  figures  are  not  correct — they  are  manifestly  incorrect — the 
copyist  has  evidently  made  a  mistake;  it  reads  85  per  cent.  It  is 
probably  58.85  per  cent.) 

The  California  Pacific  has  earnings  of  $1,528,747;  gross  earnings  per 
mile,  $13,222  79,  and  has  operating  expenses  of  50.31  per  cent.  The 
operating  expenses  of  the  Southern  Pacific  of  California  are  58.50  per 
cent. 

Northern  Railw^ay  of  California  has  gross  earnings  of  $7,465  66  per 
mile,  and  has  net  earnings  of  $1,375,131,  and  operating  expenses,  52.82 
per  cent. 

The  South  Pacific  Coast  had  gross  earnings  per  mile  of  $10,651  60; 
has  $393,807  54  net  earnings;  and  has  64.45  per  cent  as  operating 
expenses. 

The  Northern  California  Railway  earns  $1,787  68  gross  per  mile;  it 


—  197  — 

has  net  earnings  on  the  whole  road  of  $8,333  49,  and  its  operating 
expenses  91.31,  per  cent. 

The  Central  Pacific  has  gross  earnings  per  mile,  $12,644  76;  has 
operating  expenses,  55.40  per  cent,  and  has  net  earnings,  $7,107,354  90. 

The  Southern  Pacific  of  Arizona  has  $5,506  gross  earnings  per  mile; 
has  net  earnings,  $1,023,322  64;  operating  expenses,  66.75  per  cent. 

The  Oregon  roads  have  $3,502  87  gross  earnings  per  mile,  and  have 
net  earnings  of  $390,118,  and  operating  expenses  of  83  per  cent;  which 
clearly  establish,  Mr.  Chairman,  the  fact  that  the  Southern  Pacific  roads 
operating  within  California  are  actually  supporting  and  contributing  to 
the  revenue  of  the  Southern  Pacific  of  Arizona  and  New  Mexico  and  the 
Oregon  roads,  and  the  people  of  California  are  paying  for  the  burden 
and  responsibility  of  railroad  development  in  those  two  neighboring 
States. 

Earl:  Colonel  Barry,  in  reading  that,  you  say  the  Oregon  roads,  for 
instance,  the  earnings  are  so  much,  and  the  rate  per  mile  so  much,  and 
you  say  the  net  earnings  are  so  much.  What  do  you  mean  by  net 
earnings?  A.  Net  earnings  on  the  whole  road,  Mr.  Chairman.  The 
difference  between  the  operating  expenses  and  the  gross  earnings  is  the 
net  earnings.  We  have  not  given  the  operating  expenses  in  amount; 
Ave  have  simply  given  the  percentages.  The  difference  between  the 
operating  expenses  and  the  gross  earnings  would  give  the  net  earnings; 
in  other  words,  if  you  choose  to  take  that  last  figure  there,  83  per  cent, 
being  the  operating  expenses',  the  total  gross  earnings  being  $2,302,650  24, 
17  per  cent,  which  would  be  the  remainder,  is  the  net  earnings,  you  see, 
would  be  just  about  equal  to  $390,118,  which  is  the  net  earnings. 

Earl:  That  would  not  be  paying  the  fixed  charges?  A.  No;  well,  it 
is  paying  the  fixed  charges,  all  except  the  interest  on  the  debt. 

Q.  Paying  taxes  and  other  expenses,  that  are  not  included  in  oper- 
ating expenses?     A.  No,  sir;  not  taxes. 

Burke:  They  do  not  put  in  taxes,  because  they  do  not  j^ay  them,  is 
not  that  it?  A.  No;  yes,  that  is  the  reason,  I  suppose,  Mr.  Burke. 
That  is  my  impression;  you  merely  suggested  it,  and  I  suppose  it  is 
correct.     That  is  Mr.  Burke's  suggestion. 

Now,  the  Pacific  System  of  California,  I  mean  the  Southern  Pacific 
system,  excepting  Arizona,  Oregon,  and  New  Mexico,  has  a  total  mile- 
age of  3,498.24  miles;  consisting  of  the  Southern  Pacific  of  California, 
the  California  Pacific,  the  South  Pacific  Coast,  and  the  Northern  Railway 
of  California;  and  its  gross  earnings  are  $31,555,716  05;  and  its  gross 
earnings  per  mile  are  $9,020  45;  and  the  net  earnings  for  that  combina- 
tion are  $13,805,700;  and  the  operating  expenses  are  56  per  cent  of  the 
gross  earnings. 

Excluding  the  Central  Pacific,  with  its  distance  of  2,138  miles,  the 
remaining  roads,  the  California  Pacific,  the  South  Pacific  Coast,  the 
Northern  Railway  of  California,  and  the  Northern  California,  earned 
$14,926,611  69,  with  an  average  of  $69,181  77  per  mile;  and  the  net 
earnings  are  $6,388,345  28,  with  operating  expenses  of  57  per  cent  of 
the  gross  earnings. 

The  whole  Pacific  System,  then,  has  a  gross  earnings  of  $37,000,000 
and  over,  with  gross  earnings  per  mile  of  $7,800  and  over;  and  with 
net  earnings  of  $15,000,000  and  over;  and  operating  expenses  of  59  per 
cent. 

The  Atlantic  and  Pacific  System,  within  the  same  jurisdiction,  under 


—  198  — 

the  same  conditions — that  is  to  say,  taking  the  total  mileage  of  6,375.53 
miles — has  a  gross  earnings  of  .t50,449,815  88;  and  its  earnings  are 
$7,913  07  per  mile;  and  it  has  a  net  earnings  of  -$19,286,203  91;  and 
its  operating  exjjenses  are  61.77  per  cent. 

riie  Atchison  and  Santa  Fe — that  is  the  Atchison,  Topeka,  and 
Santa  Fe  Railroad — with  a  distance  of  7,124  miles,  has  earnings  of 
$36,438,188  97,  and  its  earnings  per  mile  was  $5,114  57,  being  over 
$2,000  less  than  the  whole  Pacific  System,  and  its  net  earnings  are 
$11,227,255  15;  so  that  the  gross  earnings  only— less  than  a  million 
less  tlian  the  whole  Pacific  System — in  fact  of  only  half  a  million,  the 
ditference  in  favor  of  gross  earnings  for  the  whole  Pacific  System  being 
half  a  million  over  the  Atchison,  Topeka,  and  Santa  Fe,  the  Central 
Pacific  has  the  benefit  and  advantage  on  net  earnings  of  $4,000,000. 

The  Missouri  Pacific  Company  has  an  average  earnings — of  gross 
earnings — of  $4,965  81,  and  its  operating  expenses  are  70  per  cent  and 
over. 

There  is  more,  following  up  this,  Mr.  Chairman.  I  will  not  take  the 
time  of  the  committee  further,  as  it  is  possible  for  you  to  follow  out  and 
look  over  at  your  leisure.  There  is  here  a  showing  that  on  rates  per 
n\ile,  on  engine  statistics,  tons  of  freight  carried  per  train,  pounds  of 
coal,  gross  cost  for  coal,  etc.,  percentage  of  empty  to  loaded  cars,  pas- 
senger rates,  and  all  of  those  matters  that  are  necessary  and  proper 
elements  in  determining  the  question,  that  if  anything,  the  advantage 
in  all  these  matters  is  in  favor  of  the  Southern  Pacific  system  as 
against  similar  roads  in  the  East. 

Earl:  Colonel  Barry,  from  what  source  did  you  get  these  figures? 
A.  They  were  taken  from  Poor's  Manual. 

Q.  Well,  the  Missouri  Pacific,  you  say,  is  $4,965  81;  is  that  it?  A. 
Yes,  sir.  That  is  from  Poor's  Manual,  also.  Poor's  Manual,  I  may 
explain,  Mr.  Chairman,  contains  full  details  and  statements,  received 
everywhere  as  correct  on  the  part  of  all  railroads  with  reference  to  all 
these  matters.  Now,  Mr.  Chairman,  this  discussion  that  has  been  going 
on  before  the  committee  for  some  time,  in  the  main  is  wholly  foreign  to 
the  principal  object  of  this  constitutional  amendment  now  before  the 
committee;  and  what  is  really  the  proper  subject  for  discussion,  as  of 
most  importance  to  determine  any  action  on  the  part  of  this  committee. 
I  shall  endeavor  to  show  you,  Mr.  Chairman  and  gentlemen  of  the  com- 
mittee, that  the  establishment  of  a  tariff  rate  in  the  interim  between 
the  adoption  of  this  constitutional  amendment  and  the  action  of  the 
Legislature  was  merely  an  instance  to  this  legislation,  and  not  its  main 
character.  A  moment's  reflection  will  enable  you,  gentlemen  of  the 
committee,  to  understand  why  the  force  and  strength  of  the  opposition 
has  been  placed  upon  the  incident  and  not  upon  the  principle  of  it. 
The  principal  object  of  this  constitutional  amendment,  Mr.  Chairman, 
is  to  get  rid  of  the  Railroad  Commission  of  the  State  of  California.  Get 
rid  of  it,  because  it  is  not  fit  to  be  imposed  upon  the  people  of  this  State, 
or  even  permitted  to  hold  office  and  receive  salary  from  the  State;  and 
in  every  clause  of  this  measure — in  its  central  character,  as  originally 
constructed — the  Constitution  of  the  State  of  California  in  this  particular 
was  monstrous  and  absolutely  destitute  of  good  sense,  and  without  any 
support  in  any  other  State  in  the  Union. 

It  was  in  line,  Mr.  Chairman,  if  I  may  be  permitted  briefly  to  go  over 
some  facts  which  we  forgot,  that  all  the  railroads  in  the  State  of  Cali- 


—  199  — 

fornia  had  ever  done  in  connection  with  this  subject,  from  the  time 
when  the  growing  roads,  from  1862  on,  gradually  extended  themselves 
over  the  State,  that  all  legislation  which  we  have  ever  had  on  the  statute 
books  of  the  State  of  California  was  a  law  passed  in  1861  that  there 
should  be  made  a  report  to  the  Secretary  of  State  in  reference  to  certain 
matters  by  railroad  corporations,  and  that  was  all  that  it  was  nec- 
essary for  them  to  do.  That  was  about  the  only  provision  that  the  laws 
of  the  State  of  California  carried  up  to  the  time  that  the  first  transpor- 
tation committee  was  estal)lished  here,  up  to  the  time  that  by  the  Act  of 
187 — I  will  ask  your  indulgence  for  a  minute,  Mr.  Chairman.  Mr. 
Chairman,  in  the  Act  of  May  20,  1861,  to  be  found  in  the  Statutes 
of  1861,  page  601,  were  the  only  provisions  in  reference  to  a  railway 
system  in  this  State  that  at  all  pretended  to  make  any  provision 
for  the  people  for  the  regulation  of  railway  freights  and  fares; 
and  that  was,  they  made  an  annual  report  to  the  Secretary  of  State, 
which  none  of  them  ever  complied  w'ith  or  paid  any  attention  to,  and 
next  or  subsequent  section  or  paragraph,  the  maximum,  which  so  far 
as  prevailed  in  the  State  of  California,  ten  cents  per  mile  for  passengers 
and  fifteen  cents  per  ton  for  freight,  was  established;  and  notwithstand- 
ing the  efibrts  of  the  people,  as  shown  in  the  Archer  bill,  and  the 
Freeman  bill,  and  other  bills  of  that  character,  it  was  not  until  the 
third  day  of  April,  1876,  after  fourteen  years  of  struggle,  that  the  rail- 
road company  gave  us  one  of  its  Dead  Sea  apples,  one  of  the  effects  of 

continuous  and legislation,  which  is  so  often  now"  extended  to 

the  people  of  the  State  of  California,  since  it  gave  us  a  Board  of  three 
Railroad  Commissioners,  that  were  to  last  for  two  years;  these  Railroad 
Commissioners  were  men  of  the  very  highest  character,  and  I  say  it 
without  fear  of  contradiction,  the  best  Railroad  Commission  the  State 
of  California  has  ever  had,  consisting  of  John  T.  Doyle,  Isaac  W. 
Smith,  and  Governor  and  General  Stoneman. 

The  Commission  entered  upon  its  duty;  it  served  notice  upon  the  rail- 
road that  it  desired  certain  information  the  Act  called  for.  This  Act, 
Mr.  Chairman,  was  modeled  upon  most  modern  ideas  of  the  great 
States  that  had  been  successful  in  their  contests  with  railroads.  It 
avoided  the  extreme  form  which  has  often  been  called  the  Western  or 
violent  idea,  w'hich  prevailed  in  Iowa  and  Illinois  for  awhile,  and  it 
was  formed  upon  the  more  lenient,  more  genial  and  kindly  method  of 
Massachusetts,  and  those  other  States  that  relied  upon  public  sentiment 
and  public  opinion,  and  achieved  results  of  the  proper  character; 
appealing  to  the  sentiment  of  decency,  if  any  there  existed  in  railroad 
corporations;  appealing  to  the  sense  of  justice,  if  any  one  could  ever 
cause  it  to  arise;  and  gentlemen,  what  did  they  do? 

They  refused  to  comply  with  the  request  of  the  Commission ;  they 
denied  their  authority,  and  when  taken  into  Court  audit  was  detei-mined 
by  the  Judge  of  the  Third  District  Court  that  a  mandamus  would 
apply  against  them,  and  they  would  be  compelled  to  comply  with  this 
statute,  they  went  to  the  Supreme  Court  of  the  State  and  the  appeal 
was  pending  in  the  Supreme  Court  of  the  State  Avhen  the  so-called 
Grangers  decision,  in  the  Supreme  Court,  was  the  handwriting  on  the 
wall  to  these  people,  and  then,  to  this  extent,  they  complied  with  the 
requirements  of  the  Commission;  complied  in  words,  but  not  in  acts; 
promised  to  send  reports,  reports  wdiich  for  some  extraordinary  reason 
never  materialized;  and  when  that  Commission  was  abolished  two  years 


afterwards  by  the  succeeding  Legislature,  that  appeal  Avas  still 
pending,  and  "they  were  still  defiant  of  the  authority  of  the  Railroad 
Commission. 

When  these  Commissioners  came  to  the  Legislature  and  made  their 
report,  that  Legislature  refused  to  give  them  any  assistance,  and  that  was 
the  Legislature  which,  in  derision  of  the  people,  repealed  this  Board  of 
Transportation  Commission  because  their  personnel  was  unsatisfactory, 
and  substituted  another  and  single  Commissioner  with  nearly  ail  the 
powers,  although  some  extension  was  made;  and,  at  the  same  time,  in  1878, 
m  April,  they  passed  that  amendment  to  the  law,  wiped  out  that  Commis- 
sion, and  gave  a  new  Commission,  consisting  of  a  single  Commissioner  of 
Transportation.  They  also  adopted  a  call  for  a  Constitutional  Conven- 
tion to  come  together  the  same  year,  which  Constitutional  Convention, 
carrying  out  certainly  the  hopes,  if  not  the  wishes,  of  the  Southern 
Pacific  Company,  and  the  Central  Pacific  Railroad  Company,  formed  a 
method  of  reaching  and  controlling  these  roads  that  had  been  repudi- 
ated through  the  Union,  appointed  an  irresponsible  Commission  that 
was  above  the  law,  and  that  against  the  protests  and  rights  of  the  people. 
They  thus  having  made  this  creature,  they  pretended  to  fear  they  would 
be  rent  and  torn  by  this  Frankenstein,  this  bogie,  this  monster;  they 
thus  pulled,  and  puffed  flame  and  fire  tiirough  him  to  scare  the  people 
of  the  State  apparently,  and  thus  stood  aghast  at  their  own  oppression. 

Since  that  time,  gentlemen  that  have  come  here,  and  during  the  whole 
of  this  discussion,  they  have  not  told  you  once  there  is  no  such  Commis- 
sion as  that  in  existence  in  the  United  States,  and  there  was  not  then 
at  that  time  among  all  the  other  States  of  the  Union,  and  there  are 
many  of  them  that  have  Railroad  Commissions,  and  had  then.  I  call 
your  attention  to  the  fact,  Mr.  Chairman,  that  in  the  report  of  this  very 
Railroad  Commissioner,  B.  F.  Tuttle,  as  Transportation  Commissioner 
appointed  under  the  Act  of  1878,  in  his  first  report  to  them,  to  the  Leg- 
islature and  to  the  people  of  the  State,  he  called  attention  to  the  fact 
that  out  of  seventeen  States  in  the  Union  that  at  that  time  had  Rail- 
road Commissions,  there  was  but  one  State,  and  that  was  Illinois,  that 
gave  the  absolute  right  of  fixing  rates  for  freights  and  fares  absolutely. 
That  the  States  either  as  a  class  resorted  to  the  Courts  for  the  method 
of  enforcing  the  decrees  of  the  Commissions,  or  that  they  relied  on  public 
sentiment  and  appealed  to  the  common  sense  of  the  railroads  and  to  the 
great  force  of  public  opinion  that  would  stand  by  the  right  and  truth  if 
the  people  maintained  it.  And  now,  gentlemen,  it  was  under  these 
auspices  and  these  circumstances  that  this  Railroad  Commission  of  ours 
was  ingrafted  on  our  Constitution,  fixed  there  in  all  its  enormity,  so  that 
we  have  to  come  when  we  desire  to  get  rid  of  it  to  appeal  to  the  Legis- 
lature and  obtain  against  this  powerful  influence  in  legislation,  feared 
by  ever}'  one  who  has  tried  to  stand  up  against  it;  we  have  to  appeal 
against  the  insidious  metliods  of  this  Commission  to  get  two  thirds  of 
your  votes  for  the  proper  privilege  of  going  and  asking  the  people  of 
California  whether  they  are  dissatisfied  with  this  organic  law  wrung 
from  them  by  fraud  and  imposition.  Why,  gentlemen,  what  could  be 
expected  from  a  measure  that  was  originated  in  that  way?  What  could 
we  expect  from  a  constitutional  provision  of  that  character,  inflexible, 
indurated  into  the  Constitution  and  requiring  so  much  labor  to  get  rid 
of  it? 

How  could  we  expect  to  prosper  alongside  of  those  other  States  that 


—  201  — 

in  wisdom  had  created  their  Commissions  by  legislative  Act,  so  that  the 
same  hand  that  created  them  could  also  destroy  them,  and  as  the  people 
felt  the  necessity  for  amendment  and  change,  extension  or  repression, 
for  giving  ampler  authority  to  the  Commission  or  relying  more  on  the 
■Courts  than  simply  the  blind  fiat  of  a  few  men,  there  was  still  power 
on  the  part  of  the  Legislature  to  accomplish  something?  But  here,  with 
us,  that  Legislature  has  been  tied  hand  and  foot,  and  we  hav:e  nothing 
upon  our  statute  books,  when  the  whole  series  of  the  States  in  the  Union 
have  most  beneficent  and  wise  provisions  in  reference  to  legislative  con- 
trol; provisions  that  enable  the  people  to  have  depots  when  insufficient 
accommodations  are  given  to  them;  provisions  tliat  compel  the  roads  to 
make  proper  crossings,  to  keep  their  tracks  in  proper  repair,  to  continue 
the  roads  in  operation  after  they  acquire  them,  rather  than  buy  them  solely 
to  destroy  them;  to  make  proper  bridges,  and  in  a  thousand  ways,  even 
to  the  very  extent  of  compelling  them  to  carry  hatchets  in  case  of  fire, 
and  other  parai^hernalia  and  implements  of  use,  so  that  they  may  be 
provided  with  some  means  at  least  to  secure  the  safety  of  those  who 
tra,vel.  In  the  most  minute  details,  the  most  practical  legislation  in 
the  States  of  the  Unioii,  with  the  exception  of  California,  and  even  in 
the  civilized  world,  tiiey  are  certainly  liberal  and  appreciated  both  by 
the  railroads  and  the  people. 

Seawell:  Excuse  me  in  bothering  you,  now  don't  you  think  that  it 
is  a  prett}'  good  reason  for  keeping  this  Constitution?  A.  Yes,  sir; 
but  I  think  we  ought  to  abolish  the  Railroad  Conimissio'n.  I  am  talk- 
ing about  abolishing  the  Commission,  and  that  is  the  real  subject  at 
stake  here  and  of  equal  importance  for  you  gentlemen  in  taking  up 
matters  concerning  the  progress  of  California,  for  the  fact  remains  that 
this  Railroad  Commission  is  against  the  progress  of  California.  Re- 
store the  power  to  the  Legislature  to  do  something. 

Earl:  Your  idea  is  if  the  clauses  of  the  Constitution  were  abrogated  as 
to  the  Railroad  Commission  and  its  powers,  that  the  Legislature  could 
then  by  legislative  enactment,  if  this  amendment  were  carried,  pro- 
vide for  a  Commission  here  as  in  Eastern  States?  A.  Yes;  that  is 
.about  it. 

Q.  But  it  reads:  "The  Legislature  shall  have  the  power  and  it  shall 
be  its  duty  to  establish  rates  of  charges  for  the  transportation  of  pas- 
sengers and  freight  by  all  railroads  operated  in  the  State,  and  to  enact 
such  laws  as  may  be  necessary  for  the  enforcement  and  carrying  into 
ed'ect  such  rates."  It  says,  it  shall  be  its  duty.  I  don't  see  how  they 
could  delegate  the  power  to  any  one  else.  A.  I  would  like  to  call  your 
attention,  Mr.  Chairman,  to  the  fact  that  the  subject  was  very  fully  dis- 
cussed before  the  Transportation  Commission,  consisting  of  all  these 
Boards  of  Railroad  Commissions  of  the  Union. 

Skawell:  We  don't  want  to  break  into  your  argument  or  idea.  A. 
Well,  I  just  wanted  to  ansW'Cr  Mr.  Earl's  question,  because  it  is  much 
Isetter  now.  After  the  meeting  of  the  various  members  of  the  State 
Commissions  with  the  Interstate  Commerce  Commission  last  year,  and 
.a  very  lively  discussion,  by  a  vote  of  24  to  7 — and  these. men  are  per- 
haps the  best  informed  on  this  subject  in  the  United  States — the  various 
Railroad  Commissions  and  the  Interstate  Commerce  Commission — it 
was  adopted  as  an  expression  of  sentiment  on  their  part  that  it  is 
within  the  power  of  Congress  and  the  State  Legislatures  to  delegate  the 
power  of  reasonable  regulation  to  Boards  of  Commissions;  and  whether 
"thev  are 


—  202  — 

Earl:  That  was  not  exactly  the  point.  By  the  decision  of  the  Dough- 
erty case,  as  laid  down  in  this  State,  when  the  Constitution  says  the 
Legislature  must  do  a  thing  it  must  do  it.  It  cannot  delegate  to  any 
Commission,  or  Board  of  Supervisors,  or  anybody  else _ 

A.  That  is  not  my  impression  in  relation  to  a  Commission  fixing 
freights.  In  the  report  to  the  Legislature  of  the  original  Transportation 
Commissioners,  such  legislation  is  suggested  as  the  Legislature  can  act 
upon  afterwards.  It  would  not  be  necessary  in  case  the  committee 
did  not  see  fit  to  directly  authorize  the  Legislature.  If  the  committee 
should  not  be  of  the  opinion  that  it  would  be  wise  for  the  Legislature 
to  endeavor  to  fix  rates,  it  would  not  be  necessary  for  the  investigation 
to  take  place  in  the  Legislature;  but  a  Commission  could  be  appointed 
to  gather  facts  and  statistics  and  make  a  recommendation,  just  as  do 
the  Commissions  in  Massachusetts  and  Michigan.  They  have  no  power 
to  make  rates;  nor  in  New  York;  or  lower  rates.  It  can  hear  com- 
plaints and  refer  them  to  Courts,  and  make  recommendations  to  the 
Legislature.  Nearly  all  legislation  in  Massachusetts  since  1884  has 
been  made  in  consonance  with  and  in  direct  execution  of  the  suggestions 
made  by  the  Railroad  Commissions  from  time  to  time,  as  to  proper 
amendments  in  the  law;  but  I  will  come  to  that  again,  Mr.  Chairman, 
if  you  will  indulge  me  one  moment. 

Therefore,  I  say,  Mr.  Chairman,  it  is  not  at  all  singular  that  the  real 
object  of  this  bill,  in  its  great  relations  to  the  people,  has  been  entirely 
obscured  in  this  discussion  and  this  position  of  Mr.  Johnson,  who  laid 
out  in  his  argument  and  stated  that  he  did  not  believe  there  was  any 
general  public  demand  for  the  removal  of  the  Railroad  Commission,  or 
the  change  of  this  law,  and  who,  in  some  manner,  which  I  cannot  under- 
stand the  force  of,  ridiculed  and  commenced  to  talk  about  legislation  of 
a  private  character  as  opposed  to  general  legislation  and  general  laws; 
that  we  should  not  change  our  Constitution  in  this  regard,  because,  in 
some  way,  it  would  be  making  a  special  case  of  it,  and  the  people  would 
be  going  back  of  the  general  proposition. 

Now,  Mr.  Chairman,  this  constitutional  provision  provides  first  in 
reference  to  the  Railroad  Commission,  and  no  one  supported  the  idea 
that  the  people,  after  fourteen  years  of  bondage,  do  not  wish  to  do  away 
with  this  Commission.  For  fourteen  years  we  had  something  difiierent 
from  anybody  else,  and  having  derived  no  benefit  from  it,  it  is  about 
time  that  we  ])rovide  a  Commission  more  in  accordance  with  the  wisdom 
expressed  by  those  in  other  States.  Therefore,  I  say,  Mr.  Chairman,  I 
trust  and  believe,  that  after  the  knowledge  you  have  of  what  the  State 
of  California  demands — now,  I  do  not  mean  any  senseless  clamor,  any 
talk  on  the  street  corners,  nor  voicing  any  expressions  in  the  journals, 
except  in  so  far  as  they  may  embody  and  typify  the  patriotism  and 
intelligence,  hopes,  and  aspirations  of  California.  It  is  not  to  those 
things  I  allude. 

Now,  I  say  you  recognize  the  demands  of  California;  you  recognize 
that  she,  unprogressive,  loitering  behind  in  the  march  of  progress  on  this 
western  shore,  notwithstanding  her  enormous  advantages,  her  wealth, 
her  grandeur,  that  in  forty  years  she  has  grown  so  little,  and  Washing- 
ton, and  the  Dakotas,  and  all  those  other  States  are  leaving  her  in  the 
lurch;  that  is  the  situation,  gentlemen,  and  that  is  the  demand  I  hope 
you  will  listen  to;  and  looking  across  this  State  of  ours,  give  to  the 
people  the  first  section  of  this  law.     Repeal  these  two  provisions  that 


J 


—  203  — 

provide  for  that  Railroad  Commission.     I  trust  that  the  sentiment  of 
the  committee  will  be  unanimous  on  that  point. 

Now,  Mr.  Chairman,  next  after  that — 1  am  taking  the  bill — it  was 
thought  wise,  Mr.  Chairman,  that  the  Legislature,  as  in  many  States  of 
the  Union,  should  tix  a  maximum  rate  of  tariff.  As  a  matter  of  fact, 
nearly  all  the  States  of  the  Union,  either  through  their  Courts — that 
have  Commissions — either  through  their  Courts  or  the  Legislature,  do 
carry  out  what  we  have  laid  down  here  as  the  duty  of  the  Legislature. 
There  are,  Mr.  Chairman,  nineteen  States  and  Territories  of  the  Union 
that  in  1891  had  no  Commission;  of  those,  two,  I  may  say  in  passing — 
that  of  those  nineteen,  two,  Delaware  and  Florida,  after  having  Commis- 
sions in  use,  had  abolished  them  by  legislative  enactment.  Texas,  which 
passed  a  constitutional  amendment  in  1891,  which,  Mr.  Chairman,  is  in 
some  respects  similar  to  what  has  been  suggested  here  in  this  committee 
— and  which,  in  fact,  in  some  respects,  Avas  modeled  after  it — passed  in 
1890  the  following  provision  to  its  Constitution: 

"Article  II:  Railroads  heretofore  constructed  or  which  may  hereafter 
be  constructed  in  this  State,  are  hereby  declared  public  highways,  and 
railroad  companies,  common  carriers.  The  Legislature  shall  pass  laws 
to  regulate  railroad  freights  governing  railroad  business  to  prevent  un- 
just discrimination  and  extortion." 

Although  that  is  a  constitutional  provision  of  Texas,  Texas  has  not 
as  yet  seen  fit  to  adopt  the  Railroad  Commission,  and  it  manages  to 
make  the  railroads  behave  themselves  in  that  State  with  the  authority 
of  the  Legislature.  Now,  of  the  States  that  have  Railroad  Commis- 
sions, twenty-eight  in  number,  twent}^  of  them  in  one  form  or  another, 
actually  fix  the  rates — either  maximum,  as  in  some  of  the  States,  like 
Illinois  or  Iowa,  or  absolutely,  as  in  many  of  the  States — and  ten  of 
tliose  States  of  the  twenty,  in  one  form  or  another,  legislate  through 
their  Commissions  and  prescribe  rates  for  their  railroad  organizations;, 
ten  of  those  States  make  those  rules  and  regulations  subject  to  ratifica- 
tion by  the  Courts. 

Martin:  Did  I  understand  you  to  say  that  Texas  had  no  Railroad 
Commission?  A.  Not  as  I  find  shown  in  1891;  it  may  be  so  now.  I 
was  unable  to  find  in  the  library  here,  any  publication  for  1892,  and  I 
had  to  rely  on  that  last  authority  I  could  get,  I  had  to  take  that  for 
1891;  it  may  have  been  since;  it  may  have  been  appointed  since  that 
time,  Mr.  Martin. 

In  these  ten  States  where  they  fix  the  rates  of  charge,  and  absolutely 
impose  them  on  the  corporations,  they  all  express  in  the  statute  that 
they  are  subject  to  examination  of  the  Courts,  and  practically  since  the 
decision  in  the  Minnesota  case,  I  presume  it  will  be  understood  that  ail 
rates  of  freights  and  fares  as  established  by  Commissions,  whether  so 
expressed  in  the  organic  Act  or  not,  would  be  subject  to  examination 
by  the  Courts,  if  the  charge  were  made  that  they  were  not  reasonable 
rates,  or  whether  through  passion  or  prejudice.  Now,  then,  Mr.  Chair- 
man, it  being  deemed  wise  to  restore  to  California  a  position  sim- 
ilar to  that  of  certainly  twenty-nine  States  in  the  Union,  to  operate 
through  our  Legislature  in  its  channels,  it  was  found  that  there  would 
be  an  interim  in  this  redress  ofiered  to  the  people  through  the  constitu- 
tional amendment,  for  about  two  years,  which  could  not  be  filled  in 
except  by  calling  a  special  session  of  the  Legislature. 

If  the  constitutional  amendment,  which,  I  say,  is  in  substance  the 


—  204  — 

contention  of  the  Traffic  Association  here,  which  is  most  important,  and 
which  the  interest  of  California  demands,  should  it,  at  a  special  election, 
be  adopted,  coming  in  a  few  months  from  now — coming  through  the 
people— there  would  be  until  the  next  session  of  the  Legislature,  in  1S95, 
the  absolute  maintenance  and  continuance  of  the  present  system,  from 
which  the  people  are  suffering.  Therefore,  you  can  appreciate,  Mr. 
Chairman,  this  State,  which,  after  much  discussion,  it  became  necessary 
in  some  manner  to  provide  some  method  of  extending  redress  to  the 
people;  and,  therefore,  as  I  say,  this  maximum  tarifi' — this  tariff  of  the 
Western  Traffic  Association — is  the  understanding  in  this  constitutional 
amendment.  And  if  I  have  any  force  or  any  ability  of  expression,  I 
desire  to  urge  on  this  Commission  that  all  discussion  of  this  tariff,  and 
all  the  facts  and  figures  appearing  here,  have  certainly  had  the  appear- 
ance of  avoiding  the  main  controversy  by  the  railroad  company,  which 
is:  First,  shall  you  abolish  the  Railroad  Commission,  as  fixed  by  the 
Constitution,  and,  secondly,  shall  we  give  to  the  Legislature  the  right 
to  fix  freights  and  fares?  And  then,  in  order  that  the  people  shall  not 
be  detained  and  kept  away  from  this  benefit,  we  have,  we  believe,  pro- 
vided a  just  and  proper  method. 

Now,  Mr.  Chairman  and  gentlemen,  I  presume — and  I  shall  not 
indulge  in  very  much  discussion  of  it — from  the  objections  which  have 
been  urged  to  this  measure,  Avhich  is  simply  temporary,  and  your  com- 
mittee will  understand  a  mere  incident  to  the  legislation  promised  the 
people,  because  even  if  the  Railroad  Commission  were  impeached  and 
the  Legislature  authorized  to  take  this  subject  under  its  control,  the 
omission  of  any  further  action  on  the  part  of  the  Legislature  would, 
I  think,  in  view  of  the  great  boon  that  they  had  conferred  on  them  in 
doing  so  much,  would  not  be  viewed  in  any  censorious  spirit;  but,  if  in 
addition  to  this  great  boon,  the  people  could  get  the  great  benefit  of  it, 
then  whatever  stricture  and  whatever  ridicule  may  be  put  forth  to 
drive  away  from  the  real  subject  in  this  incident,  why,  we  care  nothing 
about  it.  We  are  anxious  to  say  to  you  that  we  believe,  if  the  com- 
mittee^ will  indulge  in  a  few  moments'  reflection  on  this  subject,  it  will 
be  observed  Ave  are  urging  no  other  method  but  to  give,  in  the  interim 
during  which  this  Commission  was  abolished,  and  the  meeting  of  the 
Legislature,  some  regulation  for  the  railroads  in  California.  It  was 
necessary  somewhere  to  establish  maximum  rates;  it  was  necessary  to 
do  something.  Is  there  anybody  in  California  who  believes  that*  the 
Commission  ought  to  be  abolished,  who  believes  it  is  wrong  in  its  pres- 
ent personnel  and  consequently  wrong  in  its  origin,  and  perhaps  also 
that  the  Legislature  can  be  better  intrusted  with  this  matter  than  this 
Commission,  will  he  not  only  believe,  but  that  there  must  be  a  demand 
for  these  things,  and  that  that  demand  cannot  be  postponed  for  two 
years? 

Earl:  Well,  Colonel,  is  it  the  idea  that  the  Legislature  could  fix  dif- 
ferent rates  than  those  prescribed  in  the  so-called  Distance  Tariff"?  A. 
Yes,  sir. 

Earl:  You  mean  less  but  not  more?  A.  I  think  they  could  fix  less; 
and  I  think  by  changing  the  classification,  and  making  the  classifica- 
tion flexible,  I  believe  they  could  make  higher  rates. 

Earl:  It  says  in  the  amendment  the  Legislature  has  "no  power  to 
prescribe  rates  of  charges  for  the  transportation  of  passengers  on  any 
railroad  or  system  of  railroads  whose  gross  annual  earnings  are  more 


j|. 


—  205  — 

than  14,000  per  mile  to  exceed  3  cents  per  mile;  ancZ  providpterest  on 
that  the  Legislature  shall  have  no  power  to  prescribe  the  rates  ofe  than 
for  the  transportation  of  freight  on  any  railroad,  or  system  of  rainman, 
whose  gross  annual  earnings  are  more  than  -14,000  per  mile,  to  exc\ed 
the  rates  specified  by  the  California  Distance  Tariff,  as  in  this  sectioY. 
set  forth."  How  can  the  Legislature  under  the  language  of  this  Act 
there,  where  it  is  expressly  declared  it  shall  have  no  power  to  prescribe 

in  excess  of  this A.  No,  sir,  not  in  excess  of  3  cents  per  mile,  nor 

the  California  Distance  Tariff  rates,  I  do  not  think  so. 

Q.  So  you  put  the  power  in  the  Legislature  and  make  it  different  in 
other  States?  A.  There  are  a  number  of  States  where  the  maximum 
rates,  Mr.  Chairman,  are  in  the  Constitution. 

Q..  No,  sir;  no,  sir A.  I  think  there  are  one  or  two. 

Mk.  Martin:  You  say  there  is  one?  Which  one?  A.  I  think  there  is; 
think  there  is  one  State  in  the  Union  has  a  constitutional  provision  in 
reference  to  passenger  but  not  as  to  freight.  But  that,  Mr.  Chairman, 
that  brings  us  back  to  this  point  that  we  desire  to  obtain  a  measure  of 
relief  that  must  be  self-executed  in  the  Constitution.  If  the  Legis- 
lature, as  it  did  very  frequently  in  time  gone  by,  refuse  to  act  at  all, 
after  all  this  agitation,  we  would  simply  have  got  rid  of  the  Railroad 
Commission. 

Earl:  But,  you  were  saying  the  matter  presented  here  by  these 
railroads  in  opposition  to  this  amendment  was  notgermain  to  the  main 
features;  was  not  germain  and  pertinent  in  itself,  and  material  to  the 
general  matters.  If  the  maximum  rate  prescribed  in  this  California 
Distance  Tariff  is  burdensome  on  these  roads,  if  it  is  wrong,  and  they  shall 
come  in  and  show  the  fact?  A.  That  would  make  no  difference,  Mr. 
Chairman,  as  to  the  main  idea,  that  the  Railroad  Commission  be  abol- 
ished and  the  Legislature  should  be  vested  with  authority.  If  it  should 
be  in  the  judgment  of  the  committee  thought  unwise  for  the  Legisla- 
ture to  be  clothed  with  so  important  a  matter  as  the  maximum  rate, 
why  that  would  not,  of  course,  in  any  manner  throw  any  light  upon  the 
necessity  of  abolishing  the  Commission. 

Earl:  What,  but  Colonel,  if  the  maximum  rates  of  freight,  Colonel, 
were  such  as  to  be  oppressively  low  on  these  carriers,  are  they  not  jus- 
tified in  coming  in  here  and  showing  that  fact,  that  this  proposed  sched- 
ule of  tariff,  this  California  Distance  Tariff,  is  oppressive  and  burdensome 
in  its  nature,  is  not  that  showing  highly  pertinent  and  a  good  argument 
against  the  adoption?  A.  It  is  a  good  argument  against  the  adoption 
of  the  incident  to  the  constitutional  amendment,  but  in  no  manner 
affects  the  main  purposes  of  the  constitutional  amendment.  I  do  not 
see  if  it  was  shown  that  it  was  any  burden — that  it  is  oppressive;  but, 
as  I  said,  the  whole  strength  and  force  of  this  discussion  so  far  has 
been  on  the  mere  incident,  which  I  have  endeavored  to  show  to  the 
committee  came  from  the  necessity  first  of  abolishing  the  Commission, 
and  the  providing  a  method  of  legislative  enactment,  and  for  providing 
in  the  interim  some  redress.  There  are  three  ideas  embodied  in  the 
constitutional  amendment,  each  one  separate  and  independent,  and 
certainly  the  first  two  are  more  directly  connected  than  the  last. 

Now,  Mr.  Chairman,  it  has  been  suggested  by  the  Chairman,  if  the 
showing  here  was  of  the  character  spoken  of,  that  it  would  be  proper 
and  pertinent.  In  the  first  place,  there  have  been  a  number  of  objec- 
tions made;  some  of  them  by  roads  which  it  was  sought  to  pacify  and 


—  206  — 

quiet.  Whv,  there  are  only  three  railroads  in  the  State  of  California 
that  are  earning  more  than -1=4,000  a  mile,  as  shown  by  the  last  annual 
report  of  the  Railroad  Commissioners  of  this  State,  also  by  Poor's 
Manual.  It  would  seem  as  if  those  were  the  roads  directly  atfected,  and 
that  all  the  other  small  corporations  referred  to  were  put  forward  here 
rather  for  the  purpose  of  being  the  shoulder  and  bulwark  of  these  three 
roads  than  from  any  interest  they  felt  themselves. 

Earl:  You  know  this  maximum  of  .$4,000  was  not  in  the  amendment 
as  it  came  from  the  printer  originally?  A.  Speaking  now  for  the  bill 
as  it  is  at  present,  that  was  not  in  it  before;  it  was  suggested — this  wise 
course  was  taken,  when  the  departure  was  made,  in  the  interest  of  the 
small  roads.  I  say  the  main  object  of  the  endeavor  should  not  escape. 
Now,  these  small  roads  have  a  degree  of  immunity  and  consideration 
that  they  would  not  receive  in  other  States,  where  they  must  all  con- 
form to  the  general  provision.  Still,  I  say  the  very  concession  made 
them  has  been  used  as  an  argument  against  this  measure,  as  indicating 
want  of  thought.  I  simply  desire  to  say  that  it  was  simply  on  the 
ground  of  policy,  so  the  people  of  the  State  of  California  w^ouid  under- 
stand what  was  the  aim  and  endeavor  of  this  measure. 

The  small  roads  of  the  State  of  California  have  awakened  to  a  degree 
of  hostility;  they  have  done  very  little  to  injure  the  people  of  Califor- 
nia. Why,  gentlemen,  the  real  object  of  California's  interest  on  this 
subject  arises  from  the  extortions  of  the  Southern  Pacific  system;  there 
is  no  need  of  disguising  it,  and  there  would  be  no  such  agitation  in  this 
State  were  it  not  for  the  continuous  and  oppressive  disregard  for  the  most 
ordinary  consideration  for  the  community  in  which  it  is  transacting  its 
business.  If  it  was  not  for  the  absolute  defiance  of  all  that  is  good  in 
politics  and  all  that  is  just  in  law  by  this  corporation,  this  measure 
would  not  be  occupying  your  time  here,  and  the  great  State  of  Califor- 
nia would  not  be  wasting  the  substance  and  the  energy  of  its  legislators 
in  endeavoring  to  settle  these  complicated  and  difficult  questions.  There- 
fore, I  say  when  every  measure  of  relief  extended  to  the  people  is  used 
as  a  reflection  upon  this  measure  as  indicating  a  want  of  thought  in  its 
formation  and  in  its  preparation,  it  is  foreign  to  the  subject.  This 
measure,  gentlemen,  as  I  have  said,  is  looked  upon  as  the  necessary  con- 
sequence of  other  measures  that  were  formed  in  due  propriety,  and  it 
makes  no  difference,  gentlemen,  as  to  its  propriety,  if  made  at  the  last 
moment  or  the  first  moment. 

Now,  as  to  the  fact,  Mr.  Chairman,  the  earnings  of  these  roads — I 
shall  say  nothing  about  the  Southern  Pacific  system — I  say,  very  frankly, 
a  road  that  is  capitalized  at  $88,000  per  mile,  and  expects  to  pay  interest 
upon  it  when  it  is  actually  in  competition  with  systems  that  are  capital- 
ized at  only  $44,000,  or  where,  for  instance,  the  excess  of  funded  debt 
amounts  to  something  like  $25,000  per  mile 

Earl:  You  have  heard  the  testimony,  did  you  not,  that  the  roads  of 
the  Southern  Pacific  system  have  paid  no  dividends  in  their  history, 
excepting  a  slight  dividend  paid  on  the  Central  Pacific  at  one  time. 
A.  Y'^es,  the  Central  pays  dividends. 

Q.  That  the  bonded  debt  of  the  roads  in  California  does  not  exceed 
about  $30,000,  or  $31,000,  or  $32,000,  whereas  the  Atchison  road's  bonded 
debt  in  Kansas  is  $34,000,  and  $37,000  or  $38,000,  some  of  them,  the 
rates  now  being  such  as  not  to  pay  dividends.  Colonel,  is  it  a  correct 
statement  to  say  that  the  capitalization  is  $88,000  per  mile,  and  that 


—  207  — 

we  are  expected  to  allow  them  to  charge  rates  that  will  pay  interest  on 
that  capitalization  when  tliey  sliow  that  they  do  not  pay  more  than 
their  operating  expenses  and  fixed  charges?  A.  Oh,  well,  Mr.  Chairman, 
they  do  pay  considerahly  more  than  their  operating  expenses  and  fixed 
charges,  because  they  have  a  very  handsome  net  surplus  here.  Why 
should  the  people  be  compelled  to  pay  interest  on  a  road  with  capitali- 
zation of  $88,560  per  mile,  when  it  can  be  duplicated  here,  as  Mr.  Leeds 
says,  for  at  least  $40,000  per  mile,  and  where  it  is  in  competition  witli 
others,  constructed  upon  a  much  simpler  and  better  basis? 

Earl:  Would  you  take  it  as  a  basis,  then,  in  figuring  on  the  cost  to 
duplicate  the  road?  A.  I  desire  to  say,  Mr.  Chairman,  that  the  princi- 
ple upon  which  railroads  are  conducted  and  which  is  shown  by  the 
testimony  of  the  Cashier  of  the  then  New  York  Central  and  Hudson  River 
Railroad,  and  the  management  of  the  Michigan  Central  Road,  at  the 
same  time,  taken  before  the  United  States  Senate  Committee,  which 
was  investigating  the  question  in  1875  or  1876  of  transportation  to  the 
seaboard;  he  testified  that  their  capitalization  had  nothing  to  do  with 
railroad  rates  and  charges,  that  the  true  principle  on  which  all  railroads 
were  conducted — and  a  moment's  reflection  will  show — is  whatever  the 
traffic  will  bear.  If  an  article  cannot  afford  to  pay  what  is  asked,  it 
will  not  be  transported,  no  matter  whether  the  road  cost  $10,000  or 
$1,000,000  per  mile,  and  they  pay  no  attention  to  that  element  them- 
selves; I  sa}^  it  is  a  mere  myth,  a  fiction,  and  something  for  the  purpose 
of  confusing  and  disguising  the  real  question;  it  is  not  a  proper  element 
of  charge.  If  it  cost  the  Southern  Pacific  Railroad  Company  $120,000 
per  mile  to  construct  it  forty  years  ago,  and  a  similar  road  could 
be  built  to  parallel  it  for  $20,000  per  mile — I  say,  Mr.  Chairman, 
the  Central  Pacific  Railroad  Company  has  no  more  right  to  come 
and  ask  that  the  charges  shall  be  made  on  its  line  on  the 
basis  of  $120,000  per  mile  than  a  grocer  who  bought  provisions 
here  and  shipped  them  around  by  sea  in  1849  and  at  that  time  retailed 
them  at  fabulous  prices  in  those  times,  and  who  still  has  them  in  store, 
and  says  his  customers  must  pay  out  so  much  for  those  things,  with 
interest  running  up  to  this  amount.  Wouldn't  you  deem  this  an  impo- 
sition upon  the  people,  and  one  which  they  would  not  accept? 

Earl:  Colonel,  you    know  the  Interstate  Commerce  Commission  has 

laid  down,  as  an  element  or  basis  for  fixing  rates,  the  cost  of  the  road 

A.  I  do  not  so  understand  it. 

Q.  Well,  it  is  so.  I  have  seen  the  reference  recently  myself.  A.  It 
says  simply  the  value  of  the  property;  it  does  not  say  the  capitaliza- 
tion. 

Q.  It  says  interest  on  the  capital  invested;  that  is  the  way  it  reads. 
Colonel.  A.  Well,  gentlemen,  the  capital  invested  may  be  an  element 
of  that  character  in  conjunction  with  other  things.  I  question  that 
that  is  the  sole  element  of  determination,  Mr.  Chairman.  The  true 
method  of  fixing  railroad  freights  by  themselves,  is  upon  what  the 
traffic  will  bear. 

Earl:  Well,  Colonel,  but  when  a  State  exercises  the  power  of  fixing 
rates,  it  is  laid  down  by  statute  that  the  rate  so  fixed  must  be  just  and 
reasonable — just  and  reasonable,  as  determined  by  a  rate  fixed  upon  the 
cost  of  the  plant  itself — that  is,  the  construction,  the  interest  on  the 
bonded  debt,  and  a  reasonable  income — reasonable  profit  on  the  invest- 
ment. 


—  208  — 

A.  Mr.  Chairman,  the  question  is  what  would  be  the  just  capital* 
what  would  be  the  investment  of  capital  here;  what  would  be  the  method 
of  determining  the  cost?  I  shall  ins-ist,  I  say  frankly  to  the  committee,. 
I  say  there  is  no  investment  of  capital  in  the  line  of  the  Central  Pacific 
Railroad,  or  the  Southern  Pacific,  other  than  that  which  is  fictitious,  and 
even  if  it  were  necessary  to  consider  that  cost,  there  is  nothing  to  con- 
sider— nothing  of  that  sort;  they  havesimply  gone  to  work  and  swelled 
the  amount  of  it.  Of  course,  it  is  not  an  element  if  this  company  has 
an  exorbitant  capital  in  comparison  with  similar  roads.  I  want  to  say 
also  that  a  reasonable  rate  as  determined  by  the  theory  of  railroad  man- 
agement internally,  cannot  be  very  different  from  a  reasonable  rate  as- 
determined  by  railroad  management  considered  from  the  outside. 

Burke:  Let  me  interrupt  you.  Colonel 

Barry:  I  think,  Mr.  Chairman,  the  figures  show  conclusively — the 
figures  we  have  shown  here — of  those  roads  constructed  in  the  United 
States  since  the  completion  of  this  road,  are  meeting  their  just  obliga- 
tions, and  are  carrying  freights  at  much  lower  rates  than  the  Central 
Pacific.  I  say  we  are  entitled  to  the  benefit  of  similar  considerations, 
and  the  mere  fact,  if  it  were  true,  that  this  road  had  paid  so  much  more, 
should  be  of  no  consideration  as  against  the  other  principle  that  a 
similar  road  could  now  be  constructed  for  so  much  less,  and  we  should 
have  the  benefit  of  the  new  investors  rather  than  follow  round  the  claims- 
to  a  bad  investment. 

Earl:  Would  it  not  be  a  fair  proposition  to  say  to  them,  "Build  a 
road,  if  it  will  cost  less,  rather  than  take  other  people's  property,  and, 
say,  depreciate  it  one  half  ?" 

Barry:  I  do  not  consider  that  we  are  depreciating  their  property, 
Mr.  Chairman.  We  do  not  understand  that,  in  comparing  this  system,, 
with  its  extraordinary  capitalization,  with  other  systems,  we  are  doing- 
anything  more  than  calling  attention  to  a  well-known  fact  in  this  State; 
a  fact  that  was  pointed  out  conclusively  in  the  report  of  the  first  Trans- 
portation Commission  ever  organized  here — that  the  system  of  expan- 
sion was  indulged  in.  I  was  not  going  to  speak  about  the  Central 
Pacific,  because  I  consider  that  matter  will  be  finally  disposed  of  else- 
where. 

I  propose  to  take  up  a  road  that  has  assumed  a  very  extraordinary 
position  here,  which  is  fully  understood  by  all  of  us.  It  occurred 
recently,  and  we  know  all  about  it.  I  propose  to  show  that  the  San 
Francisco  and  North  Pacific  Railroad  Company,  in  its  claims  that  it  is 
entitled  to  any  consideration,  is  absolutely  almost  forgetting,  I  think,, 
that  it  is  only  a  few  years  ago  that  all  these  circumstances  and  facts  hap- 
pened that  go  to  show  that  its  position  is  absolutely  untenable.  Now, 
the  Donahue  and  Cloverdale  line,  and  the  other  lines  owned  by  Peter 
Donahue,  were  in  existence-in  1878.  They  had  a  total  mileage  of  one 
hundred  and  six  miles,  including  the  steamer  route.  Their  earnings- 
for  that  year — the  consolidated  road  was  opened  July  1,  1876 — were 
$467,501  52,  and  their  operating  expenses,  $220,103  43,  Jess  than  48 
per  cent,  as  you  will  observe;  and  their  net  earnings  were  $247,398  07. 
Their  capital  stock  at  that  time  was  $5,000,000,  and  it  so  appeared  in 
their  statement  at  that  time.  The  paid  up  stock  was  $3,750,000;  their 
floating  debt,  only  $20,000  36. 

On  the  other  hand,  they  expended  in  construction  $2,871,503;  for 
equipment,  $366,000;  for  other  permanent  investments,  $433,307  44;  for 


1 


—  209  — 

materials  and  fuel,  ^31,500;  for  various  accounts,  $25,888;  and  they 
had  cash  on  hand  of  $41,247.  So  that,  in  order  to  get  the  matter  up  to 
a  proper  position,  they  had  a  profit  and  loss  account  for  only  a  few 
years'  management  of  that  road,  with  no  bonded  indebtedness^xt  that 
time,  and  a  floating  debt  of  only  $20,000— they  had  $638,()06  on 
account.  That  was  due  to  the  management  of  Peter  Donahue.  That 
was  due  to  the  fact  that  the  road  was  conducted  on  principles  that  made 
it  profitable  to  them. 

In  1888,  ten  years  afterwards,  just  about  the  time  he  died,  and  when 
his  system  had  not  been  destroyed,  its  earnings  were  then  $620,685;  its 
operating  expenses  $399,146,  and  its  net  earnings,  $221,539  53.  At 
that  time  its  profit  and  loss  account  had  swelled  up  to  $1,235,547;  when, 
in  1889,  Mervyn  Donahue  (I  desire  to  say  nothing  except  what  is  kind) 
got  control  of  the  road  and  wished  to  absolutely  obtain  it  for  his  own 
property,  so  bought  out  his  family,  he  purchased  those  various  roads. 
The  mileage  was  then  166  miles;  and  although,  as  you  have  seen,  of 
this  value  of  $5,482,070,  there  was  only  an  original  subscription  of  paid 
in  stock  of  $3,750,000,  with,  perhaps,  $200,000  in  the  Sonoma  road. 
There  was  then  $1,235,247  charged  to  profit  and  loss.  He  issued  stocks 
to  purchase  those  roads  to  the  extent  of  $6,000,000,  swelling  it  up- 
about  one  third  on  the  original  investments,  which  represented  the 
fruits  of  his  father's  accurate  and  correct  management;  but,  not  having 
the  ready  money,  and  the  stocks  not  being  available  for  sale,  he  issued 
bonds  to  the  extent  of  $4,000,000,  so  that  that  road  represented,  with 
its  bonded  debt  and  stock,  $10,000,000.  Is  it  riglit  that  the  State  of 
California  should  be  compelled  to  pay  rates  upon  that  sort  of  manage- 
ment? 

Earl:  When  was  the  Ukiah  branch  built? 

Barry:  The  Ukiah  branch  w'as  built  in  1889.  It  was  only  extended 
from  Cloverdale  to  Ukiah. 

Earl:  About  thirty  miles,  is  that? 

Barry:  About  twenty-eight  miles;  from  twentv-eight  to  thirty  miles. 
Well,  gentlemen,  they  could  have  put  silver  ties  all  the  way  from  Ukiah 
to  Cloverdale  for  that  $4,000,000.  The  road  has  been  sold'recently,  and 
was  not  sold,  on  any  such  basis,  through  the  Probate  Court  of  Marin 
County,  that  is,  for  $10,000,000.  That  was  a  fictitious  value  given  to  it 
for  the  purpose  of  floating  bonds  and  of  making  rash  and  uuAvise  ex- 
tensions of  the  road  that  w^ould  not  pay.  I  say  this  road  that  comes  in 
here  and  says,  although  its  earnings  are  $6,000  a  mile  notwithstanding 
all  those  things,  and  which  I  shall  contrast,  gentlemen,  to  show  how 
they  do  things  under  similar  circumstances  in  the  East.  I  shall  take  a 
road  that  in  some  respects  very  much  resembles  that  road;  a  small  road 
in  Ohio,  one  hundred  and  sixty-four  miles  long — the  Cleveland,  Lor- 
raine, and  Wheeling  Railroad  Company,  that  runs  from  a  point  on  the 
West  Virginia  side,  up  through  northeastern  Ohio  up  to  the  lake  and 
to  Lorraine,  which  is  one  hundred  and  sixty-four  miles  long.  That 
road  earned  $1,291,471  83;  or  it  earned  as  gross  earnings  $7,860  45  per 
mile;  whereas,  the  North  Pacific  earned  $5,131  88.  But  the  operating 
expenses  of  this  road  in  Ohio — these  roads  that  are  run  so  much  more 
cheaply  than  the  California  roads — those  operating  expenses  were 
$5,631  43,  whereas  the  Donahue  road  is  $3,191  70;  so  that,  although 
the  Donahue  road  had  only  gross  earnings  of  $832,647  54,  as  compared 
with  $1,291,471  for  the  other  road— a  difference  of  $400,000— the  profits 
14 


—  210  — 

or  net  earnings  of  the  Ohio  road  were  about  $366,225,  as  against 
$314,795,  or  the  $400,000  had  shrunk  to  $355,000. 

But,  gentlemen,  the  Ohio  road  does  not  pay  $206,000  interest  upon 
the  funded  debt,  created  in  the  manner  as  is  the  case  in  this  other 
organization.  Therefore,  it  put  away  for  that  year  a  surplus  of 
$275,012  out  of  a  net  earning  of  $366,225,  while  this  other  road,  out  of 
a  net  earning  of  $314,000,  had  a  surplus  of  $356,000.  Why  was  the  sur- 
plus so  small  here?  Gentlemen,  because  of  these  $4,000,000  of  bonds, 
created  in  this  manner  and  the  origin  of  which  I  have  not  put  out  as 
fully  as  I  might,  for  the  reasons  knowai  to  every  one  here.  There  is  no 
reason,  I  say,  that  indicates  that  these  gentlemen  should  be  entitled  to 
so  much  consideration  as  has  been  given  them  when  coming  with 
claims  for  the  consideration  of  this  committee. 

Further,  Mr.  Chairman,  I  say  that,  in  so  far  as  the  roads  earning 
from  $1,200  to  $2,800,  I  think  that  a  complete  answer  to  their  position 
is,  first  of  all,  that  the  comparative  statement  with  similar  little  roads 
shows  that  similar  roads  did  prosper  under  this  tariff  in  other  places; 
and,  secondly,  that  if  we  could  not  get  redress  in  any  other  manner 
from  the  injustices  the  Southern  Pacitic  system  is  inflicting  upon  us,  it 
would  be  cheaper  for  the  Legislature  to  buy  every  one  of  these  roads, 
so  they  may  be  removed  from  the  problem,  and  so  that  we  may  stand 
face  to  face  with  the  real  antagonist  hi  this  case,  unconfused  and  un- 
confounded  with  other  side  issues. 

Now,  Mr.  Chairman,  the  proposition  has  been  made  here,  leaving  out 
of  consideration  the  attack  on  these  small  roads,  that  this  small  road, 
which  is  now  called  a  less  than  $4,000  road,  which,  because  it  does 
not  appear  in  the  report,  the  Thirteenth  Annual  Report  of  the  Rail- 
road Commissioners,  would  have  to  stay  there  permanently,  and  that 
roads  organized  afterwards  would  not  be  affected  at  all. 

I  need  not  call  your  attention  to  the  fact  that  that  amendment  introduc- 
ing the  Thirteenth  Annual  Report  there  as  a  basis,  was  not  in  the  bill  as 
presented;  and  while,  at  the  suggestion  of  the  author  of  the  bill,  or  the 
introducer  of  it,  it  may  be  necessary,  when  criticism  of  that  character  is 
made,  it  can  be  determined  that  reports  shall  be  made  annually,  as  in 
Iowa,  so  that  this  thing  will  be  very  simple  to  overcome.  That  would,  I 
think,  where  a  provision  is  made  that  roads  earning  $4,000  a  mile  shall  be 
included,  that  the  expression  of  such  a  classification  carries  with  it  the 
ability  on  the  part  of  the  Legislature  to  prescribe  such  methods  of 
determining  whether  such  $4,000  road  shall  be  included.  I  do  not  think 
there  is  anything  in  the  point  that,  really,  there  was  any  necessity  to  in- 
introduce  that  provision  in  reference  to  the  Thirteenth  Annual  Report. 
I  think,  whenever  the  road  got  $4,000  a  mile,  there  would  not  be  any  diffi- 
culty on  the  part  of  the  Legislature  afterwards  in  applying  the  proper 
tariff.  It  is  said  also,  Mr.  Chairman,  that  some  of  the  classifications  in 
this  tariff  are  different  from  the  Kansas  classifications.  Of  course,  I 
need  not  say  to  you,  Mr.  Chairman,  nor  to  the  very  learned  array  of 
gentlemen  representing  the  railroads,  that  I  don't  claim  to  be  an  expert 
on  tariff  regulations.  I  don't  claim  to  understand  all  about  the  varied 
minutiae  of  charges — the  varied  minutiae  of  charges  of  different  commod- 
ities, of  the  5,000  of  them,  that  enter  into  a  tariff;  but  I  do  know  that 
a  classification  system  that  is  used  in  some  portions  of  California,  that 
is  used  generally  in  the  regions  west  of  the  Rocky  Mountains,  cannot  be 
such  a  dreadful  thing  as  has  been  pictured  here.     I  will  also  say  that 


—  211  — 

the  roads  operating  in  the  regions  spoken  of,  managed  with  their 
operaiiiig  expenses  in  every  case  higher  in  percentage  than  the  Califor- 
nia roads,  to  get  along  with  tliese  rates.  It  is  quite  possible  that  even 
with  the  difference  in  conditions — it  is  quite  possible  that  these  roads 
in  California,  benefited  and  privileged  as  they  are,  with  lower  operating 
expenses,  should  submit  to  the  same  tariff". 

As  far  as  this  wine  business  in  Napa  is  concerned,  it  is  not  necessary 
to  say  it  is  not  any  beneficent  desire  on  the  part  of  the  railroad  that 
fixes  the  rate,  for,  if  Napa  Creek  did  not  exist,  and  if  transportation  by 
water  did  not  afford  the  wine  growers  in  that  region  some  redress,  I 
assure  you  they  would  soon  find  out  that  they  were  paying  all  the 
trattic  would  bear.  I  do  not  believe  these  little  considerations  should 
in  any  manner  affect  the  general  proposition. 

It  has  also  been  suggested,  Mr.  Chairman,  that  the  small  road  oper- 
ated to-day  by  individuals,  might  fall  into  the  possession  of  a  large 
aggregation  of  roads.  Well,  if  it  did  so,  Mr.  Chairman,  it  would  do  so 
with  the  full  knowledge  of  this  Constitution  here,  if  it  is  adopted,  and 
it  would  become  part  of  that  system,  and  it  would  be  subject  to  the 
rules  governing  that  system,  and  it  would  be  subject  to  the  rules  gov- 
erning that  system  and  this  classification,  Mr.  Chairman,  is  according 
to  the  character  of  the  road,  and  not  according  to  the  ownership,  because 
it  does  not  depend  on  anything  else  except  the  fact  that  it  don't  make 
any  difference  who  owns  the  roads,  whether  it  is  one  corporation  or 
otherwise;  it  is  there.  It  in  no  manner  conflicts  with  the  United  States 
Constitution  or  any  other  Constitution.  It  seems  to  me,  Mr.  Chairman, 
that,  therefore,  even  if  we  consider  that,  from  little  difficulties,  some- 
times a  road  may  not  pay  $4,000  this  year,  and  will  the  next  year, 
those  matters  are  very  simply  rectified  by  themselves.  In  answer,  Mr. 
Chairman,  finally,  to  this  suggestion  in  regard  to  tariffs  of  this  char- 
acter, diminishing  the  rates,  as  I  believe  Mr.  Leeds  suggested,  probably 
from  20  per  cent  to  25  per  cent,  and  especially  in  response  to  my  friend, 
Mr.  Collier — I  simply  read  his  statement  in  the  paper — I  would  like  to 
call  his  attention  to  Iowa  since  he  left  there.  On  page  9.  of  the  most 
recent  report  of  the  Commissioners  of  Iowa,  under  the  heading  of  "Com- 
misioners'  Rates, ^'  it  says:  "  The  Commissioners'  rates  have  now  been  in 
force  since  February,  1889,  and  while  they  materially  reduce  published 
tariff"  rates  in  effect  at  that  time,  yet  experience  shows  a  steady  increase 
in  tonnage  and  revenue  on  the  roads  doing  business  in  Iowa,  under  the 
operation  of  the  said  rates. 

"The  fiscal  year  1891  shows  a  net  increase  in  tonnage  of  1,369,882 
tons  over  1890.  The  result  of  earnings  is  even  more  marked.  From 
tabulated  statements  found  below,  it  will  be  observed  that,  while  for 
the  years  1887,  1888,  and  1889,  there  was  a  steady  decrease  in  the 
revenues  on  Iowa  business  under  the  rates  fixed  by  the  railroads,  yet, 
since  the  legal  rates  have  been  in  force,  there  has  been  a  marked  im- 
provement, and  a  steady  increase  in  the  revenues  of  nearly  all  the  roads 
in  the  State,  the  aggregate  earnings  on  Iowa  business  climbing  from  $37,- 
148,399  75  in  1889  to  $43,102,399  35  in  1891." 

Now,  as  you  observe,  Mr.  Chairman,  this  is  practically  16  per  cent. 
"That  the  rates  have  benefited  Iowa  is  evidenced  Ijy  the  increased 
business  thereunder.  The  testimony  of  the  railroad  officials  in  the 
Courts  was  that  they  caused  a  reduction  of  about  26  per  cent  on  local 
rates,  which  had  been  exorbitant.     The  effect  has  been  to  stimulate  Iowa 


—  -ivz  — 

industries  by  giving  them  cheap  fuel  and  low  rates  for  getting  their 
produce  to  market.  It  has  caused  the  opening  of  new  coal  mines,"  and 
so  on. 

It  also  shows,  Mr.  Chairman,  in  response  to  the  suggestion  of  the 
gentleman  respecting  railroad  construction,  it  shows  that  between  18S9 
and  the  Commissioners'  rates,  when  the  Commissioners  commenced  to 
be  active  and  establish  their  rates,  that  the  increase  was  over  100  miles 
in  a  State  that  had  been  already  crowded  with  railroads  and  almost  the 
whole  State  gridironed,  so  much  so  that  the  Commissioners  say,  it  is 
almost  impossible — speaking  of  the  subject,  they  say: 

•'The  gain  in  mileage  in  1891  for  the  fiscal  year  ending  June  30th,  is 
but  little  more  than  the  loss  by  the  Ottumwa  and  Kirkville  and  Clarinda 
and  St.  Louis.  The  gain  for  the  calendar  year  is  36.35  miles.  Iowa 
is  at  present  so  covered  with  railways  that  no  spot  can  be  found  Avithin 
our  borders  that  is  not  within  fifteen  miles  of  a  railroad.  With  this  fact 
facing  them,  it  requires  great  faith  in  the  future  of  our  State  and  people 
for  capitalists  to  elbov/  their  way  into  our  midst  and  plant  new  enter- 
prises in  competition  with  and  against  the  stern  opposition  of  those 
already  established,  and  yet  railway  construction  still  goes  on  in  Iowa." 

Now,  gentlemen,  if  it  be  true,  on  what  basis  are  we  told  in  California 
here,  that,  if  we  attempt  to  regulate  rates,  that  w^e  will  stop  all  enter- 
prise, when  in  this  State  so  covered  with  railways  that  there  is  not  a 
single  space  of  fifteen  miles  from  a  railroad,  where  competition  is  so 
intense  that  capitalists  can  hardly  see  an  opportunity  to  reap  a  benefit 
on  the  investment,  and  tliat,  between  the  establishment  of  these  rates, 
between  1889  and  1890,  there  has  been  built  over  one  hundred  miles  of 
road  in  that  State? 

Now,  gentlemen,  speaking  further  on  this  point,  I  want  to  call  your 
attention  also  to  a  matter  to  which  little  attention  is  paid.  As  an  illus- 
tration, I  will  read: 

"The  twenty -third  General  Assembly  of  Iowa  enacted  a  law  empower- 
ing and  requiring  the  Commissioners  to  establish  joint  rates  on  con- 
tinuous shipments  of  freight  over  two  or  more  roads,  where  said  roads 
failed  to  put  in  said  rates  required  by  law.  The  Board  promulgated  a 
schedule  of  rates,  fixing  the  rate  to  be  charged  by  each  road  for  such 
service  at  80  per  cent  of  the  Commissioners'  rates." 

The  representatives  of  the  Mason  City,  and  Fort  Dodge,  and  Crooked 
Creek  road  came  before  the  Commissioners  and  appealed  for  higher 
rates,  stating  that  they  could  not  live  under  the  new  joint  rates.  The 
Board  heard  them  patiently,  and  called  their  attention  to  the  fact  that  the 
Dubuque  and  Sioux  City  road  was  hauling  the  bulk  of  the  coal  into 
northwestern  low^a  from  Illinois  on  a  low  interstate  rate,  and  supplying 
a  market  that  properly  belonged  to  them,  but  from  which  they  were 
practically  shut  out  by  the  high  rates  over  the  two  roads  to  market. 
That  with  an  80  per  cent  rate  over  their  roads,  they  could  successfully 
compete  with  the  Illinois  coal.  An  understanding  was  finally  arrived 
at  to  give  the  joint  rates  a  fair  trial  for  say,  sixty  days,  the  Commis- 
sioners expressing  a  willingness  to  revise  the  rates  if  there  was  not 
shown  a  sufficient  increase  of  business  to  make  up  for  any  deficiency 
caused  by  the  use  of  those  rates.  Of  course,  naturally,  the  powerful 
big  roads  of  that  State  refused  to  pay  any  attention,  and  I  notice  the 
matter  is  before  the  Supreme  Court  of  the  United  States,  the  Iowa 
Courts  having  decided  against  them. 


—  213  — 

Earl:  Colonel,  Avliat  report  is  that? 

Barry:  This  report  is  for  1892,  and  is  dated  December  1,  1892— the 
roads  have  not  been  heard  from  smce.  They  are  quite  satisfied.  It 
has  been  going  on  now  over  a  year,  and  are  now  quite  satisfied  with 
that  general  rate,  though  they  assured  the  Commissioners  that,  if  once 
established,  it  meant  ruin. 

Now,  gentlemen,  that  is  illustrative  of  the  fact  that  you  can't  always 
believe  these  statements  that  are  founded  upon  a  narrow  view  of  the 
possibilities  of  a  great  State.  I  do  not  think,  Mr,  Chairman,  that  any 
great  injury  can  arise  from  establishing  a  tariff  that  has  proven  of 
advantage  in  other  States  of  the  Union — that  is  even  working,  also,  in 
the  State  of  California  some  benefit.  I  do  not  believe  that  these  roads 
exactly  appreciate  the  great  State  of  California,  never  feel  that  her 
development  and  her  increasing  prosperity  will  not  be  of  advantage  to 
them.  I  cannot  imagine  that  those  principles  which  have  been  followed 
by  other  corporations  in  other  States  can  possibly,  even  in  the  extraor- 
dinary conditions  of  California,  work  such  irreparable  harm  and  mis- 
chief. I  cannot  understand  that,  if  they  kindly  consent  to  unite  with 
others  who  have  made  their  homes  in  California,  to  extend  and  promote 
the  development  of  the  State,  to  advance  and  develop  her  resources,  to 
assist  our  neighbors  in  moving  over  our  borders  to  take  up  homes,  to 
enable  those  on  the  outside  to  look  with  longing  eyes  on  the  wealth 
and  treasures  of  this  great  commonwealth,  and  who  are  unable  to  par- 
ticipate in  the  blessings  which  this  railroad  has  shut  them  away  from; 
that,  if  they  would  take  by  the  hand  the  population  that  is  now  fast  fill- 
ing up  the  bleak  and  almost  sterile  plateaus  of  the  Northwest,  if  they 
would  extend  a  welcome  to  that  population  which,  notwithstanding  the 
rigors  of  the  blizzards  which  sweep  along  the  northern  portion  of  the 
continent,  have  made  their  homes  there  rather  than  come  to  this  genial 
land  of  California;  possibly,  gentlemen,  you  would  find  it  to  your 
advantage  to  accept  a  taritf  which  has  been  found  of  benefit  to  those 
less  favored  regions.  If  Kansas,  with  occasional  utter  destruction  of 
her  crops  by  grasshoppers  and  other  devastating  causes,  is  enabled, 
notwithstanding  these  great  disasters — even  if  favored  by  her  level  sur- 
face— to  enjoy  a  degree  of  railroad  prosperity  under  this  tariff  which  we 
offer  you  here,  California,  with  no  such  blights  upon  her,  with  these 
immense  fertile  valleys  that  are  now  unoccupied  because  the  population 
has  been  denied  them;  if  you  will  assist  this  State,  that  has  none  of 
those  destructive  influences,  as  in  the  more  crowded  regions  in  the 
Northwest,  now,  why,  gentlemen,  you  will  reap  your  reward,  not  only 
in  the  advancement  of  the  interests  of  California,  but  in  a  financial  and 
substantial  one — one  that  will  not  be  disagreeable  to  you,  and  that  may 
possibly  add  to  the  satisfaction  you  will  feel  in  promoting  the  prosperity 
of  California. 

Mr.  Chairman  and  gentlemen,  I  thank  you  for  your  courtesy. 

Chairman  Earl:  Is  there  any  one  who  desires  to  make  any  state- 
ment or  showing  to  the  committee.  Mr.  Martin,  do  you  wish  to  make 
any  further  statement  for  the  Southern  Pacific  Company? 

Mr.  Martin:  Are  the  proj^onents  entirely  through? 


—  214  — 
Statement  of  Senator  Gesford. 

Gesford:  I  suppose,  we  being  the  proponents  of  this  bill,  that  we  are 
also  called  upon  to  close;  whatever  the  committee  desires  in  the  premises. 
I  don't  care  to  reopen  the  matter.  Mr.  Leeds,  in  his  testimony  and 
statement  before  the  committee,  stated  those  facts  which  are  germain  to 
the  subject.  All  the  roads  of  the  State,  I  believe,  have  been  heard,  and 
I  believe  there  was  one  came  from  out  of  the  State,  from  Nevada,  who 
also  had  his  say.  And  now,  Colonel  Barry  has  closed  the  case  for  the 
proponents  of  the  bill.  I  might  add  one  or  two  thoughts  to  what  he 
has  suggested  in  respect  to  wine  rates  in  my  county — a  bugaboo  that 
has  been  raised  in  respect  to  wine  rates  in  my  own  county.  I  have 
seen,  in  the  4x6  publication  in  my  city,  called  the  "  Napa  Register,"  a 
statement  from  some  one  signing  himself  "Index,"  who  I  presume  to  be 
some  railroad  attorney,  because  it  is  written  in  railroad  language  and 
bears  the  earmarks  of  the  Southern  Pacific  Railroad  Company;  and  when 
I  read  it  I  at  the  same  time  remembered  that  the  editor  of  that  paper 
rides  on  a  free  pass,  furnished  him  by  the  Southern  Pacific  Company. 
I  am  called  upon  simply  to  refer  to  this  wine  rate  proposition. 

This  article  has  also  been  copied  in  the  railroad  organ,  known  as  the 
'"Sacramento  Union,"  from  which  I  have  received  a  few  blasts  of  loco- 
motive smoke  since  this  matter  came  up.  And  I  simply  want  to  refer 
to  those  wine  rates  made  by  my  friend,  Mr.  Martin,  the  other  evening. 
I  have  taken  particular  pains  to  write  dow'n  and  ascertain  about  the 
rates  on  wine  in  Napa  Valley;  and  permit  me  to  say,  gentlemen,  that  I 
believe  that  if  we  had  competing  lines  of  railroad  in  this  State  there 
would  be  very  little  necessity  for  legislation  upon  the  subject  of  railroad 
freights  and  fares,  because  I  believe  that  competition  would  regulate 
that  matter.  A  misapprehension  exists  with  reference  to  the  purposes 
and  object  of  this  proposed  constitutional  amendment.  This  constitu- 
tional amendment  has  not  for  its  primary  purpose  the  fixing  of  passen- 
ger and  freight  rates;  that  is  a  secondary  consideration.  The  main 
purpose  has  been  very  truly  stated  by  Colonel  Barry,  that  this  proposed 
amendment  is  to  abolish  those  provisions  of  the  Constitution  providing 
for  a  Railroad  Commission,  and,  in  the  interim,  providing  for  a  schedule 
of  freights  and  fares;  that  is,  pending  the  meeting  of  the  Legislature,  to 
which  body  it  is  proposed  to  relegate  the  fixing  of  freights  and  fares. 
Now,  it  has  been  argued  by  some  that  this  constitutional  amendment 
would  raise  the  wine  rates,  for  instance,  in  Napa  County.  It  does  noth- 
ing of  the  kind;  it  provides  for  a  maximum  rate,  beyond  which,  of 
course,  the  Legislature  cannot  go. 

In  the  interim  a  classification  is  adopted,  and  a  schedule  of  rates  is 
adopted,  so  that  we  may  have  something  to  operate  under  until  the 
Legislature  shall  have  fixed  a  schedule  of  freights  and  fares.     Now,  in 
Napa  County,  this  question  of  competition  is  illustrated  very  nicely  bjr 
the  rates  the  Southern  Pacific  people  charge  on  wine,  and  I  want  to  Veaci 
to  the  committee  a  statement  I  have  received  from  that  point  with  refHi 
erence  to  the  charges  on  wine  in  my  county.     The  distance  from  Ruth-J 
erford,  in  the  county  of  Napa,  to  San   Francisco,  bv  way  of  Suisun,  is 
about  seventy-five  miles,  and  the  rate  per  ton  for  wine  is  .$1  95,  m 
$19  50  on  a  car  of  ten  tons.     This  rate  per  car  of  ten  tons  makes  2( 
cents  per  mile  for  carrying  a  car  from  Rutherford  to  San  Franciscc 
From  Rutherford  to  Napa  City,  a  distance  of  fourteen  miles,  the  rat^ 


—  215  — 

per  ton  is  $1  20,  and  the  carload  rate  of  ten  tons,  .f  12,  or  85  cents 
per  mile.  From  Napa  to  San  Francisco  the  distance  is  sixty-one  miles; 
the  ton  rate  is  H  and  the  car  rate  -tlO,  or  16|  cents  per  mile.  Of  course, 
Napa  River  is  only  navigable  to  Napa  City.  Now,  gentlemen,  I  submit 
to  you,  if  it  pays  to  haul  wine  from  Napa  to  San  Francisco  for  IGf  cents 
a  mile — if  it  pays  the  Southern  Pacific  Company  to  haul  wine  from 
Napa  City  to  San  Francisco  for  16f  cents  per  mile — why  not  extend  the 
rate  all  the  way  up  the  valley?  If  that  was  so,  the  Napa  people,  instead 
of  paying  the  exorbitant  rates  that  they  do  now  from  Rutherford  to 
San  Francisco,  would  pay  $2  30  per  car  from  Rutherford  to  Napa. 
From  Rutherford  to  Napa  they  now  pay  |12  per  car. 

In  other  words,  if  they  would  fix  the  same  rate  from  Napa  to  San 
Francisco  as  they  now  fix  from  Rutherford  to  Napa,  we  would  now  get 
our  wine  hauled  for  $2  30  per  car,  where  we  are  now  paying  $12  per 
car.  Now,  it  is  not  possible,  gentlemen,  I  do  not  believe — it  is  not 
probable  that  the  Southern  Pacific  Railroad  Company,  if  this  amend- 
ment shall  be  adopted,  that  they  will  raise  the  rates  on  wine  from 
Rutherford,  or  that  they  will  raise  the  rates  on  wine  from  St.  Helena  to 
Napa,  or  from  Rutherford  or  St.  Helena  to  San  Francisco.  They  are 
charging  now  every  cent  the  traffic  will  bear,  and  they  are  only  kept  in 
line  by  the  little  river  that  runs  from  San  Francisco  Bay  up  to  Napa;  in 
other  words,  they  are  brought  into  competition  there  with  navigation, 
and  by  that  means  we  have  reasonable  rates  from  Napa  to  San  Fran- 
cisco. Now,  this  idea  of  competition  is  very  nicely  illustrated,  I  say,  in 
the  wine  rates  of  Napa  County,  and  the  Legislature,  if  called  upon  to 
fix  the  wine  rates  of  Napa  County,  would  undoubtedly  fix  it  on  the 
basis  that  is  now  charged  from  Napa  to  San  Francisco.  But  Mr. 
Martin  suggested  the  other  night  that  there  was  nothing  in  this  amend- 
ment which  would  permit  the  Legislature  to  provide  a  classification  on 
wine  in  Napa  County,  and  I  see  that,  whoever  has  written  this  article, 
has  said  that  there  is  nothing  in  the  Western  Classification  providing  for 
wine  in  wood  and  wine  in  glass  or  mixed  cargo. 

I  don't  so  understand  this  constitutional  amendment.  I  don't  under- 
stand that  it  compels  the  Legislature  to  adopt  the  Western  Classifica- 
tion, but,  gentlemen,  if  there  is  any  doubt  in  your  minds  as  to  that  prop- 
osition, it  is  very  easy  to  insert  in  the  amendment  that  the  Legislature 
may  fix  rates  and  fares,  and  in  doing  so,  they  may  fix  any  classification 
that  they  see  fit.  They  may  provide  a  classification  for  ore.  Mr. 
Martin  suggested  the  other  evening  that  there  was  nothing  in  the 
Western  Classification  relating  to  ore.  I  take  it  there  is  nothing  in  tliis 
constitutional  amendment  that  will  prohibit  the  Legislature  from  fixing 
the  classification,  or  from  providing  the  rates  upon  ore,  or  upon  wine,  or 
upon  any  other  commodity.  This  classification  is  only  to  be  used  in  the 
absence  of  the  Western  Classification — in  the  absence  of  any  legislation, 
and  we  can  well  afford  to  wait  a  3'ear  and  a  half,  providing  we  have 
some  reasonable  assurance  that,  Avhen  the  next  Legislature  convenes,  we 
shall  have  the  rates  remodeled  and  reconstructed  in  the  interests  of  the 
people.  Now,  another  suggestion  m.ade  by  Mr.  Martin  the  other  even- 
ing. I  want  to  say,  at  the  outset,  gentlemen,  I  will  say,  that  I  am  an 
attorney  and  don't  desire  to  be  anything  else — I  don't  know  anything 
about  railroad  rates  and  fares.  I  don't  pretend  to  know.  It  isn't  my 
trade,  it  isn't  my  business.  I  have  introduced  this  bill,  gentlemen,  in 
good  faith,  at  the  suggestion  of  the  Traffic  Association,  and  if  it  has  done 


—  216  — 

nothing  else,  I  believe  it  has  educated  the  people  of  the  State  of  California, 
and  this  committee,  and  this  Legislature,  and  1  know  it  has  given  me  a 
few  ideas  about  railroad  freights  and  fares.  I  never  did  know  much 
about  railroads — never  had  a  free  pass,  and  don't  think  I  ever  saw  one. 

But  if  this  constitutional  amendment  provides  a  wrong  basis  for 
determining  what  the  gross  earnings  of  any  road  are — that  is,  if  the 
Thirteenth  Annual  Report  is  not  a  proper  basis,  then  this  constitutional 
amendment  can  go  further,  and  provide  that  the  railroads  of  this  State 
shall  report,  say'on  or  before  the  15th  day  of  January,  1894,  to  the 
Governor  of  this  State,  what  their  gross  earnings  were  for  the  year 
1892,  iind  that  shall  be  the  basis  for  passenger  and  freight  rates  for  the 
following  year,  the  Thirteenth  Annual  Report  being  made  to  govern  for  the 
year  1892;  this  is  a  very  easy  thing  to  arrange.  The  objection  that  was 
made  by  Mr.  Martin — I  will  not  say  it  was  Mr.  Martin,  but  some  one — 
as  to  what  railroads  were  meant  when  we  referred  to  railroads  in  this 
constitutional  amendment.  It  is  a  very  easy  matter  to  incorporate  that 
"Railroads  doing  business  in  the  State  as  common  carriers;"  that  will 
cover  that  proposition. 

There  was  another  objection  made,  that  the  latter  portion  of  this 
amendment  provides  that  all  lines  should  be  considered  independently 
in  fixing  these  rates. 

I  refer  to  additional  rule  1: 

"railroads  shall  be  considered  independently  in  computing  dis- 
tances; except,  however,  that  a  system  of  railroads,  consisting  of  leased, 
operated,  or  independent  roads  controlled  under  a  common  manage- 
ment, although  working  under  different  charters,  shall  be  considered 
and  treated  as  one  road,  and  the  distance  shall  be  computed  over  the 
shortest  operated  line  composed  of  two  or  more  of  said  roads." 

I  was  surprised  at  the  Southern  Pacific  people  objecting  to  that  rule, 
as  it  is  really  in  their  interest,  because,  if  they  lease  several  roads,  the 
rates  are  fixed  over  the  shortest  operated  line  of  leased  roads,  and 
hence  they  would  get  larger  freight  rates  than  if  controlled  independ- 
ently, because  five,  ten,  or  fifteen  miles  on  a  short  mileage  are  higher 
there  than  on  longer  miles  of  road;  therefore,  I  can  see  nothing  in  that 
objection  on  the  part  of  Mr.  Martin;  but  this  rule  is  really  in  the  inter- 
est of  the  Southern  Pacific  Railroad,  if  it  could  be  in  the  interest  of 
anybod}^  at  all. 

Now,  as  to  these  rates  being  reasonable — I  don't  care  to  discuss  that; 
but  it  is  in  evidence  here,  and  it  seems  to  me  it  is  a  matter  worthy  of 
consideration,  that  if  roads  in  other  parts  of  this  country,  having  a 
gross  earnings  of  $4,000  per  mile  can  make  money,  they  ought  to  in  the 
State  of  California.  That  looks  like  a  common  sense  principle  to  me; 
and  the  idea  that  we  are  to  fix  our  rates  and  have  no  redress  because  of 
our  high  capitalization,  seems  to  me  ridiculous.  It  makes  no  difference 
whether  one  road  is  capitalized  for  $100,000  a  mile  or  $40,000  a  mile. 

Earl:  You  take  a  mountain  road,  for  instance,  which  costs  much 
more  to  construct. 

Gesford:  Well,  I  would  make  it  uniform — that  is  the  idea;  no  mat- 
ter what  the  road  costs. 

Earl:  That's  the  point  I  was  getting  at.  That  is  the  point  which  is 
not  to  be  escaped.  You  take  a  road  built  to-day,  say  in  the  mountains, 
which,  unavoidably,  by  reason  of  tunneling,  grading,  etc.,  will  cost  a 
great  deal  more  than  one  in  the  level  Sacramento  Valley,  and  vet  this 


i 


_  217  — 

is  uniform;  and  a  rate  reasonable  for  roads  here  in  the  valleys  must  be 
reasonable  for  one  constructed  at  an  enormous  outlay — perhaps  four  or 
five  times  as  much  as  the  other. 

Gesford:  Well,  this  maximum  rate  is  provided  only  in  the  interim, 
that  is  all. 

Earl:  But,  Senator,  the  Constitution  says  you  cannot  exceed  that 
maximum. 

Gesford:  If  they  earn  $4,000  per  mile. 

Earl:  They  cannot  exceed  it. 

Gesford:  But  if  they  make  money  on  $4,000  per  mile  in  other  parts 
of  the  country,  it  seems  to  me  they  ought  to  do  so  here — possibly  more. 

Earl:  There  they  may  have  a  level  road,  as  level  as  a  table,  while 
here  are  the  Sierra  Nevadas.  While  for  all  railroads  in  operation,  this 
amendment,  Senator,  says  for  five  miles  and  under,  first-class  merchan- 
dise, per  one  hundred  pounds,  would  be  3|  cents. 

Gesford:  Yes. 

Earl:  Yes,  that  is  the  maximum;  whereas,  in  the  mountains,  with 
heavy  grades,  etc.,  that  might  be  excessively  low,  in  the  valley  it 
might  be  reasonable.  There  is  the  very  difficulty  in  attempting  to  fix  a 
uniform  rate. 

Gesford:  Of  course,  there  are  a  great  many  mights  in  this  case.  You 
might  suppose  anything. 

Earl:  Yes,  but  Senator,  is  it  not  inevitable — how  can  you  escape  it? 

Gesford:  Well,  we  do  escape  it.  That  $4,000  per  mile  is  enough  to 
make  up  for  the  additional  cost  of  operating. 

Sea  well:  Senator,  allow  me  to  interrupt  you  a  minute.  Do  you 
mean  to  say — I  think  you  did,  if  I  understood  you  correctly — do  you 
mean  to  incorporate.  Senator,  these  pages,  3,  4,  5,  6,  7  in  the  Constitution? 

Gesford:  Yes,  those  distance  tariffs;  if  that  is  what  you  refer  to. 

Sea  well:  Yes,  those  are  what  I  refer  to. 

Gesford:  Yes,  that  is  what  the  Traffic  Association  proposes  to  incor- 
porate in  the  Constitution.  If  I  may  be  permitted  to  state  what  my 
opinion  as  a  lawyer  is,  I  would  prefer  first  to  wipe  out  this  Railroad 
Commission.  That  is  the  great  proposition  in  this  case,  and  I  take  it, 
gentlemen,  that  this  thing  is  one  of  the  things,  above  all  other  things, 
that  the  railroad  companies  of  this  State  do  not  want  wiped  out. 

Seawell:  Do  you  understand.  Senator,  that  these  pages,  3,  4,  5,  6, 
and  7 

Gesford:  That  is,  the  distance  tariff.  Yes,  these  pages  of  figures 
go  in. 

Seawell:  What,  go  into  the  Constitution? 

Gesford:  Yes,  they  are  to  go  into  the  Constitution,  certainly,  be- 
cause you  have  got  to  have  a  distance  tariff". 

Barry:  You  must  have  something  in  the  interim  to  work  under. 

Gesford:  Yes,  in  the  interim.  What  are  you  going  to  do  from  the 
time  it  goes  into  effect  until  the  time  the  rates  are  fixed?  What  I 
would  suggest  as  a  lawyer  would  be  this,  and  it  only  suggested  itself  to 
me  to-day — and  I  may  say  this  distance  tariff"  has  given  me  no  little 
concern  and  trouble,  because  it  was  such  an  innovation  and  it  would 
look  so  strange  in  the  Constitution,  which  is  already  filled  with  statutes 
on  ever}'  conceivable  subject.  But  if  this  Railroad  Commission  could 
be  wiped  out,  abolished,  then  this  Legislature  could  enact  a  law  pro- 
viding for  a  Commission  to  fix  a  schedule  of  freights  and  fares.     Tlie 


—  218  — 

Kailroad  Commission  to  be  subject  to  the  Legislature,  and  the  Legisla- 
ture could  Avipe  it  out  whenever  it  saw  fit.  Let  the  Governor  of  this 
State,  immediately  after  abolishing  this  Commission,  appoint  three 
Railroad  Commissioners  to  act  temporarily,  and  at  the  next  general 
election,  let  them  fix  a  system  of  freights  and  fares;  and  provided  that 
at  the  next  general  election,  a  Board  of  three  Railroad  Commissioners 
from  the  State  at  large,  shall  be  elected  by  the  people — that  Railroad 
Commission  to  be  subject  to  the  Legislature,  so  that  we  would  not  have 
to  get  rid  of  it  by  compelling  a  two-thirds  vote  of  each  house  and  then 
by  ratification  over  again  by  the  people  of  the  State.  Some  such  system 
as  that,  I  conceive,  would  be  more  lawyer-like  than  this;  but  this  is  a 
war  measure. 

Barry:  Yes,  it  is  a  war  measure. 

Gesford:  It  is  a  war  measure — like  Lincoln,  when  he  called  for  troops 
and  it  was  said  he  hadn't  authority,  he  replied,  "  But,  gentlemen,  this 
is  a  war  measure." 

Barry:  Certainly,  it  is  a  war  measure. 

Seawell:  Oh,  then,  it  is  a  war  measure?  I  am  in  accord  with  you 
in  much  that  you  say,  but  here,  these  pages,  3,  4,  5,  6,  7,  and  8,  must  be 
voted  for  by  the  people  if  you  put  them  in  the  Constitution.  I  don't 
think  they  would  ever  be  able  to  make  them  out — to  understand  them. 

Gesford:  I  don't  think  they  would,  either.  That  is  what  we  are 
here  for,  Senator,  to  give  them  something,  and  then,  when  we  get  out 
of  here — I  don't  think  we  are  any  the  less  through  with  it  when  we 
get  out.  I  think  it  is  our  duty  to  explain  these  matters  to  the  people 
of  the  State  of  California. 

Burke:  Let  me  ask  you,  Senator,  if  it  would  be  any  worse  to  allow 
the  interim  to  go  quietly  along  until  the  next  election  than  it  is  now. 

Gesford:  I  am  glad  you  asked  me  that  question,  Senator.  I  believe 
there  is  enough  decency  left  in  the  railroad  companies  of  tliis  State,  and 
I  refer  particularly  to  the  Southern  Pacific  Company,  to  compel  them 
to  maintain  a  fixed  and  reasonable  rate  of  freights  and  fares  until  the 
Legislature  shall  have  convened.  It  cannot  be  any  worse  than  now,  for 
these  Railroad  Commissioners  have  not  given  any  relief.  The  rail- 
road companies  fix  every  tariff  before  it  is  published  anyway.  It  could 
not  be  any  worse  even  if  embodied  in  the  Constitution.  If  "there  is  any 
reason  why  they  should  not  be  embodied  in  the  Constitution — that  dis- 
tance tariff'  and  that  reference  to  the  Western  tariff"— abolish  the  Rail- 
road Commission  and  leave  the  people  of  the  State  without  any 
Railroad  Commission. 

Seawell:  Do  you  believe,  as  a  matter  of  fact,  and  as  an  attorney — 
do  you  believe  these  pages,  3,  4,  5,  6,  and  7,  should  go  in  the  Constitution, 
that  cannot  be  changed  readily? 

Gesford:  You  are  asking  a  very  pointed  question.  Not — that  is — we 
understand 

Seawell:  No,  I  am  simply  asking  a  question.  I  have  not  attended  | 
all  the  meetings.  But  do  you  really  think  that  these  pages,  3,  4,  5,  6,  7,.  * 
should  go  into  the  Constitution?     Is  that  statesmanlike? 

Gesford:  Well,  I  don't  think  that  Thomas  Jefferson,  or  Daniel  Web- 
ster, or  John  C.  Calhoun  would  have  put  it  in  the  Constitution.  No. 
But  I  do  say,  and  I  repeat  it,  I  do  not  care  how  it  may  look  in  the  Con- 
stitution, if  it  will  give  the  people  the  relief  asked  for.  I  don't  see  that 
it  will  make  the  Constitution  any  worse  off"  if  it  will  only  do  the  work. 


—  219  — 

Seaavell:  That's  right,  Senator. 

Barry:  I  say  as  a  lawyer,  it  is  fitting  for  such  an  extraordinary  time, 
and  under  sucli  extraordinary  conditions  as  are  existing  to-day  in  Cali- 
fornia, and  it  will  be  a  monument  in  history,  that  the  people  of  Cali- 
fornia were  only,  in  despair,  forced  to  seek  and  obtain  relief  in  this 
manner. 

Seawell:  Colonel,  I  think  you  made  a  very  eloquent  argument  upon 
the  present  condition  of  matters  affecting  railroad  legislation,  and  I 
think  these  things  ought  to  be  regulated  by  statutes.  1  think  3^ou  are 
perfectly  right  in  that  and  correct  in  your  motives.  But  I  think  your 
argument  is  against  putting  that  in  the  Constitution.  I  think  the 
Railroad  Commission  has  not  done  its  duty — I  agree  with  you  upon 
that. 

Barry:  Well,  you  want  to  have  this  in  the  interim. 

Earl:  But,  Colonel,  that  interim — how  long  is  that  interim?  That 
goes  into  the  Constitution  forever,  until  changed  by  constitutional 
amendment.     How  long  is  that  interim? 

Barry:  Well,  Senator,  it  don't  seem  as  long  as  fourteen  years. 

Earl:  But  this  goes  into  the  Constitution  forever. 

Seawell:  Cannot  it  be  based  upon  the  Constitution  in  some  other 
way  so  it  can  be  applicable? 

Gesfokd:  No,  sir.  Of  course,  if  the  Legislature,  as  it  undoubtedly 
will,  fixes  a  system  of  freights  and  fares  at  the  next  session  of  the  Leg- 
islature; if  it  becomes  incorporated,  it  will  be  so  much  dead  timber  in 
the  belly  of  the  Constitution,  so  to  speak. 

Earl:  But  this  clause  says:  "The  Legislature  shall  have  no  power 
to  exceed  these  rates " 

Gesford:  I  say,  Mr.  Chairman,  that  specific  distance  tariff  would 
become  inoperative,  in  all  probability,  because  the  Legislature  would 
change  it  in  many  H'espects;  it  would  be  the  maximum  rate. 

Earl:  But  how  could  they  do  it?     They  could  not  exceed  them. 

Gesford:  No;  they  could  not  exceed  it,  but  they  might  make  a  less 
rate. 

Seawell:  In  case  it  worked  a  hardship  to  the  small  roads,  how  could 
that  be  overcome?  If  you  put  it  in  the  Constitution,  you  destroy  the 
road. 

Barry:  That  assumes  a  state  of  facts  that  we  do  not  see  exists, 

Seaw^ell:  You  admit  my  premises.     Am  I  not  right? 

Barry:  If  it  would  destroy  a  road,  your  premises  are  correct. 

Seawell:  That  would  make  the  Constitution  unyielding  and  unplia- 
ble  upon  the  small  roads. 

Barry:  If  it  would  destroy  a  road,  your  premises  are  correct.  On 
the  otlier  hand,  the  Legislature  meets  every  two  years  and  could  adjust  it. 

Seawell:  Of  course,  in  asking  the  question  it  didn't  indicate  any- 
thing at  all.  I  am  simply  asking  for  information.  I  have  not  attended 
the  meetings  of  the  committee. 

Gesford:  I  want  to  state  to  the  committee,  when  asked  whether 
this  matter  should  be  embodied  in  the  Constitution,  I  don't  know — I 
understand — I  want  to  say  that,  under  the  present  condition  of  aft'airs 
in  this  State,  Avhy,  that  is  the  only  time  I  would  do  it. 

Seawell:  In  time  of  war,  you  say,  and  not  peace,  you  mean. 

Gesford:  Yes. 

Barry:  Yes,  in  time  of  war — it  is  a  war  measure. 


—  220  — 

Earl:  Take  the  Atchison  road,  against  which  there  does  not  exist 
any  prejudice.  They  have  shown  to  the  committee  they  are  doing 
business  to-day  in  this  State  at  a  loss,  yet  their  annual  income  per  mile 
exceeds  this  in  gross;  it  is  $6,000.  They  are  doing  business  at  an  actual 
loss  in  this  State.  If  that  be  true,  would  it  be  just  or  right  to  put  a 
maximum  in  the  Constitution,  which  is,  I  will  say,  according  to  their 
showing,  a  less  sum  per  ton  than  they  are  now  charging;  would  it  be 
just  and  right  to  put  it  in  the  Constitution? 

Gksford:  If  they  are  doing  business  at  a  loss,  Mr.  Chairman,  and 
honest  in  their  endeavors  to  compete  with  the  Southern  Pacific  Com- 
pany, which  I  understand  they  are,  it  will  be  a  very  little  Avhile  before 
they  are  doing  business  at  a  profit. 

Earl:  How  can  that  be  Senator?  They  are  operating  in  the  south- 
ern part  of  the  State,  over  a  large  section  of  the  country,  in  some 
places  where  there  is  not  a  house  in  miles,  and  they  want  to  come 
north. 

Gesford:  When  they  get  ready  to  come,  they  are  going  to  come. 

Earl:  It  would  cost  a  vast  sum  of  money.  And,  if  they  are  doing  a 
losing  business  now  down  there,  if  this  rate  is  less  than  they  are  now 
<;harging,  they  would  be  making  still  less  instead  of  more  money,  as 
they  have  shown  conclusively  to  the  committee.  They  would  not  be 
likely,  in  view  of  that,  to  invest  120,000,000,  which  I  suppose  is  not  an 
■excessive  estimate  of  the  expense  of  coming  to  San  Francisco. 

Gesford:  Well,  Mr.  President,  in  answer  to  that  proposition,  and  it 
may  be  considered  no  answer  at  all,  I  had  rather  the  Atchison,  Topeka, 
and  Santa  Fe,  or  Southern  Pacific,  or  any  other  railroad  company,  would 
■operate  at  a  loss  than  the  producers  should  operate  at  a  loss.  That  is 
the  only  answer  I  have  to  it. 

Earl:  Would  it  not  discourage  the  entering  of  competing  lines,  which 
•we  all  desire? 

Gesford:  I  don't  think  so.  The  Southern  Pacific  operated  at  a  loss 
for  awhile,  until  it  got  in  and  got  a  foothold  and  got. the  trade. 

Earl:  Have  the  committee  any  questions — anything  to  say? 

Burke:  No  questions. 

Earl:  Any  questions,  Senator? 

Sea  well:  Nothing. 

Earl:  Any  one  that  desires  to  make  any  statement  to  this  commit-' 
tee?  Is  there  any  one  present  that  wants  to  say  anything  to  this  com- 
mittee? 

[The  Chairman  here  arose  and  looked  around  the  room  and  again 
repeated  his  question  aloud,  but  no  one  answering,  he  said: ) 

"If  not,  we  will  consider  the  matter  of  this  amendment  submitted." 

[The  committee  were  leaving  the  Senate  chamber,  when  Mr.  Barry 
-addressed  the  Chairman,  as  follows:] 

"Senator  Earl,  Mr.  Sneath  does  not  think  he  has  been  fairly  treated, 
because  the  committee  has  not  heard  him." 

Earl:  I  asked  if  any  one  Avas  present  who  wished  to  address  the 
•committee,  but  no  one  answered. 

Mr.  Sneath:  I  sent  my  name  up,  and  thought  that  sufficient. 

Earl:  That  makes  no  difference.  The  gentleman  should  have  come 
forward  when  he  was  asked  for.  If  you  want  to  make  a  statement 
now,  I  will  call  the  committee  together  to  hear  what  you  sa}'. 


—  221  — 

Sneath:  Well,  I  sent  my  name  up;  I  came  up  from  San  Francisco 
and  I  think  I  should  be  heard. 

Earl:  But  you  did  not  answer  that  you  wanted  to  be  heard. 

Sneath:  Well 

Earl:  If  you  want  to  be  heard,  I  will  sit  now  and  hear  you. 

Sneath:  I  just  want  to  make  a  statement  of  the  facts. 

[The  Chairman  then  called  the  committee  together  for  the  purpose  of 
hearing  Mr.  Sneath's  statement.] 

Statement  of  R.  G.  Sneath. 

Chairman  Earl:  Mr.  Sneath,  would  you  like  to  make  a  statement  to 
the  committee?  Senators — Mr.  Sneath  came  up  here  from  San  Fran- 
cisco on  this  matter,  and  would  like  to  be  heard;  he  did  not  understand 
that  it  was  taken  under  advisement. 

Mr.  Sneath:  Mr.  Chairman,  and  Gentlemen  of  the  committee — I 
came  here  for  the  purpose  of  stating  some  facts  that  have  come  to  my 
knowledge  in  relation  to  the  matter  of  railroads  in  this  State  and  else- 
where, and  more  particularly  in  reference  to  the  Southern  Pacific,  for  I 
have  had  more  dealings  with  them.  My  own  particular  case:  I  handle 
considerable  freight;  and  in  relation  to  one  portion  of  it — that  is  the 
ice  business — I  find  by  the  figures  which  I  have,  and  which  were  pre- 
sented before  the  Railroad  Commission,  that  they  are  charging  me  nine 
times  as  much  per  ton  per  mile  as  they  do  in  the  East  for  the  same 
privilege.  I  furnished  those  facts  before  the  Railroad  Commission.  The 
fact  is  not  disputed ;  the  facts  are  plain ;  and  the  rates  in  the  East,  and 
1  only  refer  to  combination  rates,  that  is  of  the  lines  of  railroads  con- 
necting with  the  lakes  for  the  interior  and  to  some  two  thousand  differ- 
ent places.  The  Southern  Pacific  charge  nine  times  the  average  charge 
there,  which  is  about  one  half  a  cent  per  ton  per  mile,  the  charge  here 
being  4-|  cents  per  ton  per  mile  in  carload  lots;  that  makes  just  nine 
times  as  much.  In  relation  to  the  matter  of  grain:  I  also  handle  a 
great  deal  of  grain. 

Burke:  To  what  points  do  you  ship?     A.  From  San  Francisco. 

Q.  Over  what  lines?  Over  what  lines  is  it  4^  cents?  A.  I  ship 
wherever  I  can  from  San  Francisco. 

Q.  Do  you  ship  very  much,  Mr.  Sneath?  A.  I  cannot  ship  very 
much. 

Earl:  I  thought  you  stated  that  you  shipped  a  large  amount  of  ice, 
Mr.  Sneath. 

Mr.  Sneath:  I  manufacture  a  large  amount;  I  don't  ship  much,  I 
ship  around  the  bay  of  San  Francisco  near  San  Francisco;  am  not  able 
to  ship  in  the  interior  very  much  on  account  of  high  rates.  I  go 
round  the  bay  of  San  Francisco  and  near  San  Francisco;  we  cannot 
compete  with  other  parts  simply  because  the  rates  are  lower  from  other 
points,  from  the  mountains. 

In  the  matter  of  hay  and  grain,  I  receive  most  of  my  hay  and  grain 
from  Hollister,  that  is  about  100  miles  from  San  Francisco.  The  rates 
from  Hollister  for  instance  on  grain  are  .$3  per  ton;  that  is  3  cents  per 
mile  for  100  miles.  Now  the  rates  on  grain  from  the  Mississippi  River 
East  to  Atlantic  ports  is  about  one  half  a  cent  per  ton  per  mile;  some- 
times it  is  less,  but  that  is  considered  really  a  good  rate — one  half  a  cent 
per  ton  per  mile.     From  St.  Louis  to  New  Orleans,  the  rate  is  $2  20  per 


—  222  — 

ton.  You  call  that  one  thousand  miles;  that  is  .22  of  a  cent— less  thnn  a 
quarter  of  a  cent  per  ton  per  mile.  They  find  money  in  that  business. 
If  you  will  notice  the  financial  reports  in  relation  to  the  value  of  rail- 
road stocks  in  the  East,  you  will  find  the  stocks  depend  very  materially 
on  the  quantity  of  grain \hat  is  carried  by  the  roads.  If  the  grain  crop 
is  short  in  the 'West,  and  the  freight  is  low,  stocks  go  down. 

It  shows  for  itself,  on  the  face  of  it,  you  know,  that  even  one  half  a 
cent  per  ton  per  mile  is  considered  good  profit  for  railroads  in  the  East. 
There  is,  of  course,  a  large  amount  of  freight  taken  for  much  less  than 
that.  They  send  it  as  low  as  16  cents  a  hundred  from  Chicag )  East — as 
low  as  16  cents  per  hundred  pounds;  22  cents  a  hundred,  or  about  -1^4  40 
per  ton  for  about  nine  hundred  miles.  If  22  cents  is  considered  a  good 
high  rate,  which  it  is,  and  I  have  seen  it  quoted  at  16  cents  for  this  one 
thousand  miles.  To  show  that  the  railroad  people  really  themselves 
think  that  that  is  a  reasonable  rate,  they  charge  themselves  that  rate  on 
all  the  freight  they  handle  in  their  own  accounts.  They  charge 
about  one  half  a  cent  per  ton  per  mile.  On  their  Pacific  division,  for 
instance,  the  Southern  Pacific  road  charges  .53  of  a  cent,  I  believe,  as 
shown  in  their  last  report;  that  is  about  one  half  a  cent.  Now%  I  tell 
you,  they  now  charge  me  on  grain  from  Hollister  3  cents  per  ton,  or 
six  times  as  much  as  they  charge  themselves.  Then  in  the  same  way 
from  San  Jose,  it  is  $1  75  per  ton  on  grahi  to  San  Francisco — 50  miles — 
or  8^  cents  per  ton  per  mile,  or  seven  times  as  much  as  they  charge 
themselves  per  mile.  These  are  very  high  prices,  but  I  have  taken  the 
rates  for  one  hundred  and  twenty-one  ditferent  places  through  Cali- 
fornia, and  the  average  of  those  one  hundred  and  twenty-one  different 
places  was  2.52  cents  per  ton  per  mile;  well,  that  is  just  five  times 
what  is  charged  from  the  Mississippi  River  East — one  half  a  cent  a  ton 
a  mile.  The  question  is,  can  our  people  stand  any  such  charge  as  that; 
it  seems  strange  to  me. 

Martin:  Allow  me  to  ask  you  a  question.  You  made  a  complaint 
before  the  Board  of  Railroad  Commissioners  of  this  State  concerning 
the  charges  on  ice  from  San  Francisco,  some  time  ago?     A.  Yes,  sir. 

Martin:  Did  not  the  Railroad  Commission  reduce  the  rate  at  that 
time  very  materially?  A.  They  reduced  it  from  ten  times  as  much — 
the  original  rates  were  ten  times  as  much — to  nine  times  as  much.  It 
does  not  affect  the  business,  simply  because  it  was  reduced  to  points  w'e 
did  not  reach. 

Martin:  Don't  you  know  the  rate  from  San  Francisco  to  Fresno,  a 
distance  of  two  hundred  and  six  miles,  is  less  than  two  cents  a  ton  a 
mile,  now,  to-day,  and  has  been  for  some  time?  A.  Well,  that  was 
a  point  we  could  not  ship  to  if  we  wanted  to;  that  is  out  of  our  district; 
Ave  cannot  reach  that — that  is  going  toward  another  company. 

Earl:  To  what  company?     Los  Angeles? 

Sxeath:  Well,  the  Truckee  people  get  it  for  |3  a  ton  from  the  Truckee 
River,  I  believe,  and  we  are  charged  H  from  San  Francisco  to  Fresno, 
as  a  matter  of  course. 

Martin:  That  is  two  cents  a  ton  a  mile,  is  it  not? 

Sneath:  Yes;  but  natural  ice  can  be  harvested  and  put  up  cheaper 
than  manufactured  ice  can  be  made  here.  The  Truckee  company  are 
charged  about  one  cent,  from  .32  of  a  cent  per  ton  per  mile  for  ice  from 
Truckee  to  San  Francisco,  while  we  are  charged  4^  cents  per  ton  per 
mile  to  go  out  of  San  Francisco. 


I 


—  223  — 

Martin:  Not  to  Fresno? 

Sneath;  No,  but  you  understand  we  do  not  ship  to  Fresno.  "We 
cannot  reach  there;  that  does  not  belong  to  us.  That  is  the  reason  the 
railroad  companies  fix  the  rates,  so  we  could  not  use  them,  so  they 
could  not  do  any  good. 

Earl:  Mr.  Sneath,  how  much  more  do  you  sell  ice  for  here  than  they 
do  in  the  East?     Did  you  ever  figure  on  that? 

Sneath:  Well,  the  ice  costs  a  great  deal  more  here  than  in  the  East 
on  account  of  the  coal,  and  on  account  of  other  things.  Coal  is  the 
principal  thing  in  the  manufacture  of  ice. 

Earl:  The  coal  also  costs  more  to  the  railroads  to  move  the  ice,  does 
it  not?  A.  No,  sir;  it  does  not;  the  railroad  company  can  get  coal  for 
$3  a  ton,  while  it  costs  us  here  $6  and  $7  a  ton;  there  is  the  difference. 
The  railroad  company  can  get  coal  at  Ogden,  first-class  coal  for  about 
$3  per  ton. 

Q.  How  about  it  here;  how  much  do  they  pay  for  coal  here?  As  to 
Ogden,  you  might  say  they  could  go  back  into  Kansas  and  get  it  for  75 
cents  per  ton?     A.  Well,  their  road  reaches  from  here  to  Ogden. 

Q.  Well,  it  costs  something  to  get  that  coal  from  Ogden  here?  A. 
Well,  that  furnishes  that  end  of  the  road. 

Q.  How  about  this  end  of  the  road;  is  that  the  price  of  coal  here;  is 
it  the  same  price  here?  A.  Yes;  but  on  the  El  Paso  portion,  on  and 
along  the  line  of  that  road,  they  probably  get  it  fully  as  cheap  as  at 
Ogden;  possibly  cheaper;  and  it  is  likely  the  coal  down  there  for  $2  50 
per  ton,  the 

Q.  But  the  ice  is  cheaper  there,  is  it  not?  A.  No,  sir;  I  think  the  ice 
is  higher  in  that  section. 

Q.  If  it  depends  upon  the  price  of  coal,  it  would  be?  A.  Well,  they 
have  smaller  machines,  and  don't  make  it  on  so  large  a  scale,  that  is 
the  difference;  they  cannot  aftbrd  to  make  it  as  cheap  with  a  small 
machine  as  with  a  large  machine;  but  this  matter  of  fuel,  I  note  the 
railroad  company  put  in  its  coal  for  $5  85  this  last  year;  as  I  told  you, 
they  can  get  all  the  coal  they  want  at  Ogden  for  about  $3  per  ton,  and 
all  they  want  south  for  less,  and  here  in  San  Francisco  for  less  than 
$5  85  per  ton  of  2,000  pounds.  And  wood  they  put  in  for  $4  60  or 
$4  70  a  cord.  I  know  parties  that  have  offered  them  wood  at  $1  a  cord 
and  they  would  not  take  it. 

Q.  Was  that  at  Ogden,  too?  A.  No,  sir;  not  at  Ogden.  The  wood, 
as  I  understand  it,  can  be  cut  and  be  put  alongside  the  track  for  about 
$1  25  a  cord.  And  why  should  they  enter  it  in  their  accounts  as  high 
as  $4  and  the  odd  cents  a  cord  for  wood? 

Mr.  Gage:  You  say  one  half  a  cent  is  the  rate  the  company  charge 
themselves.  Add  this  to  the  cost  of  coal  at  Ogden,  one  half  a  cent  ])er 
mile,  what  would  it  be  worth  in  San  Francisco?  What  is  the  distance? 
A.  Well,  I  suppose  it  is  900  miles  to  San  Francisco. 

Mr.  Curtis:  At  half  a  cent  for  nine  hundred  miles,  that  would  be 
$4  50.     Add  $4  50  to  $3;  that  is  $7  50,  isn't  it? 

Mr.  Sneath:  I  imagine  that  class  of  coal  is  not  used  in  San  Francisco; 
it  is  probably  used  only  as  far  as  Sacramento.  I  understand  the  coal 
from  the  South  is  going  up  as  far  as  Fresno,  being  supplied  from  Los 
Angeles.  The  Atlantic  and  Pacific  road  put  down  in  their  reports  $1  50 
per  ton  for  coal,  and  wood  at  $1  per  cord.  I  speak  of  these  things 
to  show  that  the  operating  expenses  of  the  Southern  Pacific  Company 


—  224  — 

are  kept  up  by  such  charges.  Notwithstanding  these  high  charges-^ 
the  Central  Pacific,  as  I  understand  it  from  their  report— tlieir  operat- 
ing expenses  last  year  were  only  55  per  cent  out  of  the  earnings.  I  do 
not  know  of  another  road  in  the  United  States  where  they  are  as  low  as 
on  the  Central  Pacific.  I  can  give  you  the  net  earnings.  I  can  show 
you  what  those  roads  are  capitalized  at;  what  the  earnings  show.  I 
can  show  you  what  the  road  is  actually  doing,  and  their  purpose  is— I 
had  better  speak  of  that,  if  you  have  the  time. 

Seawell:  Do  those  figures  agree  with  the  statements  of  Colonel  Barry; 
he  gave  us  that. 

Earl:  If  so,  you  had  better  file  them  with  the  clerk.  A.  I  do  not 
think  Mr.  Barry  has  said  anything  in  relation  to  that. 

Mii.  Gage:  I  know  something  about  the  price  of  coal.  For  about 
fourteen  years  on  the  Central  Pacific  I  bought  every  pound  of  it.  I  have 
paid  for  cargoes,  and  only  regretted  I  could  not  get  more  of  them,  from 
$10  to  $]  2  per  ton  by  the  cargo  in  San  Francisco. 

Sneatii:  Oh,  yes;  coal  has  been  very  high;  on  three  occasions,  at 
least.     You  take  the  Southern  Pacific  of  California,  1,403.5  miles 

Burke:  Did  you  get  those  figures  from  Poor's  Manual?  A.  No,  sir; 
from  the  Southern  Pacific's  reports,  i  have  it  here.  The  Southern 
Pacific  Railroad  of  California  has  a  gro&&  revenue  of  $6,611  54  per 
mile — that  is  what  you  call  the  Coast  Road — with  a  net  revenue  of 
$2,744  09  that  capitalizes  at  15  per  cent. 

Earl:  You  differ  $1,800  per  mile  there  from  Colonel  Barry's  figures. 
A.  I  took  it  from  the  Southern  Pacific  report;  from  their  last  report. 

Barry:  Ours  are  from  Poor's  Manual,  1892. 

Sneath:  $2,744  09,  that  is  the  net;  that  is  the  way  it  is  given  here. 

Burke:  For  the  same  mileage? 

Sneath:  Capitalized  at  5  per  cent  it  would  make  a  valuation  for  that 
road;  it  would  make  good  security  for  $54,881  80;  that  &hows  what  the 
net  earnings  would  capitalize  the  road  for  at  5  per  cent. 

Earl:  How  much  was  that?  A.  That  was  $541,881  80.  That  is  the 
load  that  road  would  carry  in  the  shape  of  bonds.  What  you  might 
call  capitalizing  it.  This  road,  the  Southern  Pacific  road  of  California, 
is  nearly  all  level  road,  and  I  estimate  that  road  could  be  built  for- 
$20,000  per  mile.  If  that  is  the  cost,  the  revenue  they  receive  on  that 
road  would  be  equal  to  14  per  cent,  a  14  per  cent  dividend  on  a  valua- 
tion of  $20,000  per  mile.  I  made  these  figures  to  show  what  a  promis- 
ing property  they  have  got,  you  know.  The  South  Pacific  Coast  is  one 
hundred  and  four  miles  in  length.  They  report  gross  earnings, 
$10,651  66.     Does  that  tally  with  your  figures? 

Burke:  Some  figures. 

Earl:  Net  earnings?     A.  The  net  earnings  were  $3,786  61. 

Barry:  My  net  earnings  were  in  bulk  for  the  whole  line  of  the  road, 
Mr.  Chairman.     And  Mr.  Sneath's  are  for  each  individual  road. 

Sneath:  Yes,  for  each  individual  road.  That  road  would  capitalize 
for  $75,732  20  from  the  net  earnings  of  the  road  at  $20,000  per  mile,  or 
about  19  per  cent  interest  per  annum  on  the  net  revenue  that  they 
report;  that  is  a  i)retty  good  sized  interest,  19  per  cent.  I  think  that 
South  Pacific  Coast  road  could  certainly  be  built  for  $20,000  per  mile. 
It  is  a  narrow  gauge  road  all  the  way. 

Take  the  Northern  Railway,  390.38  miles;  its  gross  revenue  was 
$7,465  65,   and   the   net   revenue   $3,522  65,   which    would   capitalize 


$70,451  per  mile.  At  a  cost  of  $20,000  per  mile—  and  that  is  a  level 
road — it  would  pay  about  20  per  cent  per  annum  dividends.  That 
ought  to  be  good  property. 

The  Northern  California  Railway,  51.02  miles,  has  a  gross  revenue  of 
$1,876  16,  and  a  net  revenue  of  $1,663  33— no,  I  mean  $166  33— that 
would  capitalize  $3,266;  that  is  all  it  will  carry  at  5  per  cent;  that 
pays  seven  eighths  of  one  per  cent  per  annum.  That  don't  pay  very 
well. 

The  Central  Pacific  Railroad  Company,  with  a  gross  earnings  of 
$12,224  76,  and  a  net  revenue  of  $5,452  80;  that  would  capitalize  at 
5  per  cent  so  as  to  carry  $109,056  40  in  bond,  or  at  $20,000  per  mile  it 
would  pay  27  per  cent  per  annum  profit.  This  Central  Pacific  road  is 
1,360  miles  long;  there  is  probably  50  to  100  miles  of  that  that  is  mount- 
ainous, and  some  parts  of  it  may  cost  over  $20,000  per  mile. 

Burke:  How  long  is  that?  A.  That  is  the  Central  Pacific,  1,360.28 
miles.  -  That  includes  from  Ogden  clear  through  to  San  Jose,  to  Sacra- 
mento, and  some  other  branches,  all  together  1,860.28  miles.  They  put 
them  together  in  their  reports  as  all  belonging  to  the  Central  Pacific, 
although  a  portion  of  the  property  is  non-aided,  and  I  have  put  it  in 
that  shape  simply  because  they  have  separated  in  this  way. 

Burke:  I  understand.  A.  Out  of  1,360  miles,  perhaps  100  miles  is 
mountainous  road,  costing  a  great  deal  more  than  $20,000  per  mile — 
probably  $60,000  per  mile,  I  imagine  it  can  be  built  for;  probably  ]00 
miles  of  it  for  $40,000  per  mile,  and  the  balance  for  $20,000  per  mile, 
but  I  will  take  $20,000  per  mile,  that  would  give  interest  at  27  per  cent 
per  annum,  judging  from  net  earnings. 

Gage:  Is  that  the  Central  Pacific?     A.  Yes,  sir. 

Gage:  Do  you  remember  what  it  is  bonded  for?  A.  No;  I  did  not 
look  at  that, "but  it  will  capitalize  with  the  net  earnings  as  a  basis. 
They  made  enough  money  to  give  them  a  clear  5  per  cent;  that  would 
capitalize  at  $109,000  per  mile,  which  is  good  interest. 

Sneath:  That  is  pretty  good  property,  gentlemen. 

Gage:  I  believe  the  Central  Pacific  bonds  are  all  six  per  cent?  A. 
Well,  I  assume — some  of  the  bonds  are  five,  they  could  be  disposed  of 
at  five  per  cent  without  any  trouble. 

Martin:  What  you  and  Colonel  Barry  term  the  net  profits  is,  as  you 
understand,  the  amount  left  after  deducting  the  operating  expenses 
from  the  gross  earnings — is  it  not?  You  don't  mean  that  is  the  amount 
of  money  applicable  to  dividends?  You  mean  after  deducting  the  actual 
operating  expenses  from  the  gross  earnings?  A.  I  took  it  right  from 
the  books,  the  net  earnings  over  and  above  operating  expenses,  as  I 
understand  it,  fixed  charges  and  taxes — or  what  are  called  fixed  charges; 
interest  that  the  investment  is  entitled  to  and  taxes  will  go  together,  all 
the  balance  goes  to  operating  acccount;  that  is  the  way  I  understand  it. 

Martin:  You  don't  mean  by  the  net  earnings  the  amount  applicable 
to  dividends?  A.  Yes,  sir;  that  is  the  dividends  and  taxes,  and  as  you 
don't  pay  your  taxes,  they  don't  figure. 

Earl:  Would  you  not  pay  the  fixed  interest?  A.  As  a  general  thing 
railroads — that  is  the  majority — consider  that  as  a  part  of  the  fixed 
charges.  It  goes  with  interest  on  the  investment  as  the  operating  ex- 
pense. That  covers  every  charge  of  every  kind  and  nature,  against  the 
railroad  for  operating — everything;  and  then  the  fixed  charges  are  the 
taxes  and  the  interest. 


—  226  — 

Earl:  On  bonded  debt?     A.  Yes,  sir. 

Barry:  Bonded  indebtedness — funded  indebtedness. 

Sneath:  Well,  it  may  not  be  bonded;  the  interest  on  capital;  what 
the  capital  gets,  what  is  called  fixed  charges. 

The  Southern  Pacific  of  Arizona — the  first  of  those  roads  here — 384.91 
miles,  has  gross  receipts  of  $3,788  61;  the  net  earnings  are  $1,481  95; 
that  would  capitalize  at  5  per  cent,  $296,338  80  per  mile,  at  $20,000 
per  mile.  I  suppose  to-day  if  it  could  be  built  for  that,  it  would  pay 
7  per  cent  for  those  net  earnings. 

The  Southern  Pacific  of  New  Mexico.  The  gross  earnings  are  $3,486  20 
per  mile,  the  net  earnings  $2,647  67  per  mile;  that  would  capitalize  at  5 
per  cent,  $52,953  40  per  mile,  and  pay  13  per  cent  on  a  cost  of  $20,000. 
I  put  in  $20,000 — I  suppose  somewhere  between  $15,000  and  $20,000. 
The  profits  received  there  would  be  13  per  cent  per  annum  on  the  busi- 
ness. 

Burke:  What  are  the  gross  earnings?     A.  $3,486  20. 

Sneath:  Now,  take  the  California  and  Oregon  road,  558.50  miles.  It 
has  a  gross  revenue  of  $3,821  57,  and  a  net  revenue  of  $680  55  per  mile; 
that  would  capitalize  at  $13,611.  Or  it  would  pay  3^  per  cent  interest 
on  $20,000  a  mile;  that  would  capitalize,  at  5  per  cent,  at  $13,611. 

The  Oregonian  Railroad.  That  pays  a  loss  of  about  1  per  cent  on  a 
valuation  of  $20,000. 

The  Portland  and  Willamette,  28.5  miles,  has  a  gross  income  of 
$3,151  46,  and  a  net  income  of  $751  50;  that  would  capitalize  at  about 
$15,000,  or  pay  3^  per  cent  on  $20,000. 

The  California  Pacific  Railroad.  That  has  an  income  of  $13,242  79 
on  115.44  miles  of  road.  Its  net  earnings  are  $6,879  40.  That  would 
capitalize  at  about  $131,000  per  mile  at  5  per  cent.  The  net  earnings 
of  that  road  would  pay  a  dividend  on  $131,000  per  mile,  in  round  num- 
bers. Or  at  $20,000  per  mile,  this  California  Pacific  Railroad,  which  is 
on  a  dead  level  almost  (it  runs  from  Sacramento  to  South  Vallejo,  and 
from  there  up  to  Calistoga,  115.44  miles) ;  it  is  almost  on  a  dead  level — 
on  $20,000  a  mile,  which  would  build  that  road,  it  pays  32^  per  cent  on 
a  cost  of  $20,000  per  mile. 

Earl:  You  don't  figure  on  any  engine  or  cars? 

A.  Yes,  sir;  figure  in  this  whole  business.  I  calculate  the  $20,000 
per  mile  would  build  the  road  and  equip  it;  all  of  these  figures  are 
based  on  the  building  of  the  road  and  their  equipment.  These  figures 
are  all  made  in  that  way,  account  of  construction  and  equipment. 
Now,  there  are  a  good  many  small  roads  running  that  are  built  for 
$8,000,  $10,000,  and  $15,000  per  mile,  and  we  don't  know  as  a  matter  of 
course  whether  it  is  absolutely  correct,  or  water  has  got  in  it  or  not,  but 
it  is  generally  stated  that  you  can  build  a  road  now  with  anything  like 
decent  economy  at  $15,000  per  mile.  I  think  the  Great  Northern  was 
built  for  something  like  $24,000  a  mile,  and  it  is  through  a  mountainous 
country.     Isn't  that  true,  Mr.  Gray?     Don't  they  report  $24,000  a  mile? 

Mr.  Gray:  Yes,  sir. 

_Mr.  Sneath:  That  is  a  mountainous  country.  The  idea  of  $24,000  a 
mile;  it  don't  seem  possible,  hardly;  but  they  are  building  roads  very 
cheaply  now.  Now,  the  question  is.  Are  the  people  to  pay  interest  on 
what  these  roads  cost  twenty  or  thirty  years  ago?  Evervthing  else  that 
has  been  built  twenty  or  thirty  years  ago  has  been  torn  down  or  rebuilt. 
They  have  got  their  money  out  of  it— they  have  made  money  out  of  it, 


and  arc  putting  up  new  ediiices;  they  have  thrown  the  old  ones  away. 
That  is  what  I  have  been  doing  for  the  last  twenty  or  twenty-five 
j'ears,  and  I  have  certainly  felt  I  have  got  my  interest  on  investments 
made  at  that  time;  I  believe  we  have  a  right  to  ask,  as  citizens  of 
this  State — we  have  a  right  to  ask  that  they  shall  not  charge  us  more 
than  a  fair  rate  of  interest  on  the  cash  value  of  their  property.  I  think 
we  have  a  legal  right  to  ask  that.  I  certainly  don't  want  them  to  lose 
anything  on  the  property — I  don't  want  them  to  work  for  me  for  noth- 
ing, still,  at  the  same  time,  every  one,  of  course,  is  trying  to  get  in  this 
W'orld  all  they  can,  and  the  easiest  way  they  can  get  it;  and  those  that 
have  to  pay  their  money,  they,  of  course,  are  holding  back  all  they  can. 
But  there  is,  of  course,  a  legal  and  moral  position  that  we,  of  course, 
must  occupy,  and  as  far  as  a  legal  point  is  concerned,  I  suppose  there 
is  no  doubt  they  can  hold  us  to  a  reasonable  compensation  for  the  use 
of  their  capital.  Now-,  the  proposition  is  to  fix  what  that  capital  ought 
to  be — what  this  propert}'  should  be  worth,  and  then  it  is  a  very  easy 
matter  for  the  Legislature,  or  the  gentlemen. of  the  committee,  or  the 
Railroad  Commission,  or  what  not,  that  is  authorized  to  fix  the  rates  of 
fares,  etc.  Gentlemen,  you  can  fix  the  rates  and  fares,  provided  you 
will  allow  them  6,  or  7,  or  8  per  cent,  if  you  please,  interest  on  the  cap- 
ital invested  on  that  property.  Now,  you  can  arrange  your  rates  and 
fares  to  bring  that.  If  they  don't  bring  that,  then  you  have  no  legal 
right  to  make  it  so  low  that  they  will  not  get  their  legal  rate  of  interest. 
There  is  the  point;  there  is  the  key  to  the  whole  thing.  This  property 
must  pay  a  reasonable  rate  of  interest  on  its  value,  on  its  cash  value  at 
the  present  time — not  what  it  cost  tw^enty-five  years  ago. 

Mr.  Gage:  May  I  ask  what  you  would  do  with  the  Central  Pacific, 
that  is  bonded  to  the  Government,  say  for  $54,000  a  mile — a  Govern- 
ment contract.  California  is  great  for  stickling  to  the  Specific  Contract 
Law,  which  was  passed  a  few  years  ago.  What  would  you  do  with  that 
which  was  bonded  to  the  General  Government?  A.  I  don't  think  the 
Government  has  the  right  to  charge  us  any  more  than  an  individual 
charges  us. 

Mr.  Gage:  Then  it  is  the  fault  of  the  Government.  I  want  to  find 
one  thing  that  this  railroad  company  is  not  chargeable  for,  that  would 
be  the  fault  of  the  Government?  A.  I  don't  think  the  Government  has 
any  more  right  than  you  have  to  charge  us  more  than  the  service  is 
worth.  I  believe  the  Government  ought  to  be  able  to  do  it  for  what  the 
service  is  worth,  and  she  certainly  ought  to  be  able  to  make  rates,  and 
my  idea  is  that  they  should  be  fixed  without  regard  as  to  who  owns  the 
bonds;  that  there  is  railroad  property  worth  so  much,  and  they  are  enti- 
tled to  6  per  cent  interest  on  that  property  after  paying  all  expenses. 
Now  you  fix  your  rates  to  bring  that  money,  and  be  sure  you  do  not  get 
them  too  low,  and  see  that  they  get  their  money.  I  am  perfectly  satis- 
fied to  see  them  all  get  full  interest  on  their  investment,  but,  good  gra- 
cious, I  don't  want  to  see  them  pay  20  per  cent  to  the  Government  or 
anybody  else. 

Mr.  Gage:  But  those  bonds  are  mortgaged  to  the  Government  at  6 
per  cent — those  bonds  are  not  due  yet  or  payable.  Would  you  be  for 
breaking,  forever  violating  it?  We  are  great  sticklers  for  specific  con- 
tract laws  here  in  California?  A.  Well,  as  I  said  before,  I  should  fix 
the  rates  upon  that  road,  or  any  other  road,  just  the  same  as  though 
there  were  no  bonds  on  it  at  all.     Of  course  I  should  be  careful  in  esti- 


—  228  — 

mating  the  value  of  that  road — the  honds  of  that  road — I  should  not 
get  it  any  lower  than  they  ought  to  get  it.  Because  the  road  is  bonded  for 
twice  what  it  is  worth,  that  is  no  reason  the  people  of  this  State  should 
pay  twice  the  charges  that  are  necessary. 

Mr.  Earl:  How  would  you  enable  the  roads  to  pay  their  bonded 
indebtedness?  A.  Let  them  lose  the  bonds,  the  same  as  we  all  of  us 
have  to  do  when  we  make  a  bad  trade  or  investment. 

Mr.  Earl:  Suppose  the  road  is  foreclosed?  A.  It  is  simply  a  mistake 
in  issuing  so  many  bonds  on  that  road.  If  that  road  is  only  worth  so 
much  money,  let  the  Government  foreclose  it.  And  if  the  whole  prop- 
erty is  not  worth  $65,000  per  mile,  or  any  other  sum  the  road  may  be 
owing,  the  road  will  sell  for  what  it  is  worth,  and  whoever  has  the  last 
mortgage  on  it  is  the  one  that  makes  the  loss.  Let  the  Government 
lose  it.  It  shows  they  make  bad  mistakes  all  the  time  in  matters  of 
legislation,  and  there  is  no  one  to  make  it  good  to  them.  If  we  make  a 
bad  trade  we  have  got  to*  stand  it,  the  same  as  all  of  us  when  we  make 
a  bad  trade.  But  really,  as  far  as  the  Central  Pacific  is  concerned,  I 
have  shown  you  the  receipts  of  that  road — the  net  earnings  of  that  road, 
to-day — is  equal  to  $109,000  capitalization  at  5  per  cent.  Now,  that  is 
good  property.  The  indebtedness  of  that  road  is  not  any  such  sum  as 
that.  Now,  suppose — I  don't  know  exactly,  I  haven't  figured  what  the 
bonded  debt  was — I  suppose,  with  the  interest  and  all,  it  may  run  up 
to  $70,000  and  $75,000  a  mile. 

Mr.  Gage:  You  wouldn't  pay  that?  A.  Well,  I  don't  know  about 
that.     That  road,  you  see 

Mr.  Gage:  It  is  too  much.  You  wouldn't  pay  that?  A.  I  tell  you 
the  way  this  is  divided  up  in  your  reports.  This  Central  Pacific  is  not 
the  same  Central  Pacific  upon  which  the  Government  has  issued  her 
bonds;  it  is  mixed  up.  In  this  case  there  is  thirteen  hundred  and 
sixty  miles.  In  the  road  that  was  subsidized  there  was  seven  hundred 
and  thirty  odd  miles,  and  consequently  this  don't  apply,  only  in  a  gen- 
eral way.  I  put  it  in  here  in  this  way  because  the  railroad  folks  have 
seen  fit  to  put  it  together  in  their  report  that  way.  But  there  is  a  large 
portion — there  is  five  hundred  or  six  hundred  miles — that  the  Govern- 
ment has  nothing  to  do  with,  and  this  five  hundred  or  six  hundred 
miles  increases  the  value  of  that  road  very  much;  so  really  it  is  not 
fair.  The  Central  Pacific  does  not  earn  of  itself — that  portion  that  has 
been  subsidized — does  not  earn  the  relative  proportion  that  appears  in 
this  report;  it  don't  earn  that.  I  didn't  figure  it  out,  and  I  couldn't 
do  it,  because  the  freight  is  not  separated  in  the  accounts.  You  don't 
know  what  business  passes  over  the  Central  Pacific;  that  is,  what  pro- 
portionate amount  that  has  been  received  per  mile  has  really  passed, 
has  passed  over  the  Central  Pacific. 

The  books  are  not  kept  in  that  shape,  because  it  is  difficult,  indeed, 
to  do  it,  because  they  have  to  take  into  account  freight  at  Sacramento, 
and  as  the  road  goes  to  San  Jose  by  the  Western  Pacific — and,  of 
course,  the  bulk  of  it  going  to  San  Francisco,  back  and  forward — it  is 
almost  impossible  to  keep  the  books,  to  keep  the  accounts,  so  as  to  have 
the  equivalent  freight  that  passes  over  the  subsidized  road  kept  by 
itself.  It  is  a  very  difficult  matter  to  do  it.  I  have  an  article  here 
from  the  "Scientific  American,"  taken  from  the  "North  American  Car- 
Builder,"  I  think  it  is  called,  in  which  they  undertake  to  prove  that  in 
the  winter  season  in  the  East,  that  a  locomotive,  if  it  will  do  a  certain 


—  229  — 

amount  of  work  in  the  month  of  .Tuly,  that  she  can  only  do  half  as 
much  in  January,  and  they  give  us  an  instance  on  a  \Vestern  road 
where  the  coal  account  in  the  winter  season  amounts  to  some  $24,000 
or  $25,000  more,  I  believe,  than  in  the  summer  season,  for  the  same 
amount  of  business — the  same  number  of  locomotives,  I  believe, 
exactly.  It  goes  to  show  that  our  climate  here  is  very  favorable  to  this 
kind  of  business.  The  points  in  this  article  are  these:  You  will  all 
understand  and  appreciate  the  fact  that,  in  the  first  place 

Mr.  Burke:  Have  you  the  article?     A.  Yes,  sir;  I  have  the  article. 

Mr.  Burke:  Can't  you  file  it  with  the  clerk?  A.  It  is  a  paper,  you 
know.     I  can  file  it,  and  the  committee  could  then  examine  it. 

Mr.  Burke:  We  are  going  to  be  pressed  for  time,  and  you  can  pass  on 
to  those  other  points — you  have  other  points,  have  you  not?  A.  I  am 
very  nearly  through.  This  is  the  "  Scientific  American"  Supplement.  I 
can  get  another  copy  of  it. 

Mr.  Burke:  I  will  ask  you  to  file  it  with  the  clerk,  and  then  we  can 
look  it  over. 

Mr.  Sneath:  The  feeding  water  is  ice  cold,  and  goes  into  the  hot 
boilers — it  requires  more  fuel  in  order  to  heat  it  up.  Every  moving 
part  of  the  engine,  wliere  the  lubricating  oil  is,  is  more  or  less  stifi' — it 
freezes  up,  it  becomes  tough,  and  it  is  almost  impossible  to  move.  All 
of  those  that  are  accustomed  to  seeing  the  old  fashioned  wagons  which 
used  tar  on  the  wheels  know  the  difficulty  they  had  in  the  morning,  of 
starting  their  wagons — it  is  all  tight,  you  know;  it  would  get  tight  as 
soon  as  it  got  cold,  and  on  a  frosty  morning  it  was  almost  impossible  to 
move  the  wagon. 

This  article  states  that  lubricating  material  for  car  wheels,  for  in- 
stance, that  it  is  necessary  to  use  a  heavy  material,  something  that 
would  not  heat  up  and  run  off;  if  it  was  too  light  and  oily,  and  the 
weather  warm,  it  will  all  run  away,  and  the  axle  will  become  hot.  If 
it  is  too  thick,  and  the  weather  gets  very  cold,  it  freezes  up,  and  there  is 
a  friction  there  that  requires  an  immense  amount  of  force  to  move. 
And  then  again,  the  track  being  frozen,  the  car  wheels  slip.  The  track 
being  rough,  as  a  matter  of  course,  it  requires  more  force  to  move  the 
train,  and  then  again  they  can't  take  advantage  of  the  down  grades. 
When  there  is  no  snow  or  ice  on  the  tracks,  they  can  shut  ofi"  steam  and 
let  their  engines  run  along  perhaps  a  quarter  or  half  a  mile  until  they 
come  to  their  station.  When  there  is  ice  and  snow  on  the  track,  they 
have  got  to  keep  on  steam  until  they  get  right  to  the  station,  using 
almost  double  the  amount  of  steam  all  the  way.  That,  together  with  a 
great  many  other  items,  makes 

Mr.  Gage:  Makes  it  very  expensive. 

Mr.  Sneath:  Yes,  makes  it  very  expensive  in  the  winter  season. 

Mr.  Gage:  Certainly,  and  makes  it  very  difficult  to  do  business.  I 
want  to  say  a  word,  Mr.  Sneath;  we  have  felt  that  a  great  many  years 
on  the  Central  Pacific;  more  than  one  half  of  the  Central  Pacific  labors 
under  just  exactly  what  disadvantages  you  are  talking  about,  where 
the  thermometer  is  frequently  below  forty  degrees  below  zero.  It  runs 
for  over  four  hundred  and  fifty-two  miles  of  that  road  in  the  State  of 
Nevada,  where  it  labors  under  that  disadvantage.  About  two  thirds  of 
the  Central  Pacific  has  been  operated  ever  since  it  was  built  under  just 
the  contingency  you  are  speaking  of. 

Mr.  Sneath:  This  was  all  new  to  me  until  I  saw  this  article  in  the 


—  230  — 

"Scientific  American."  I  believe  it  is  absolutely  true  for  that  reason. 
In  California  the  bulk  of  the  business  is  in  the  valley,  where  we  have  no 
snow  and  ice.  It  is  only  in  the  mountains.  And  on  this  line  there  is 
only  a  small  percentage  of  the  business. 

Mr.  Curtis:  Allow  me  to  ask  a  question;  are  there  any  grades  on 
those  roads  with  which  comparisons  are  made? 

Mr.  Sneath:  Oh,  those  Eastern  roads  have  all  sorts  of  grades,  up  and 
down,  all  over  the  country. 

Mr.  Curtis:  Have  they  any  very  high  mountains,  such  as  in  Cali- 
fornia? 

Mr.  Sneath:  Well,  yes;  when  it  comes  to  the  question  of  grades  they 
are  very  expensive. 

Mr.  Curtis:  Do  you  think  it  takes  more  or  less  coal  to  go  up  the 
mountain  from  Sacramento  to  the  Summit,  ascending  an  elevation  of 
seven  thousand  feet  in  one  hundred  and  live  miles,  than  it  does  in  the 
valley? 

Mr.  Sneath:  Perhaps  you  have  heard  it  stated  that  the  cable  cars  of 
San  Francisco  are  run  more  easily  on  the  hills  than  they  are  in  the 
valleys. 

Mr.  Curtis:  There  might  be  a  reason  for  that — that  these  cars  are 
counterbalanced. 

Mr.  Sneath:  It  is  on  the  same  principle.  You  go  over  a  grade  of 
seven  thousand  feet  on  one  side  for  a  hundred  miles,  and  then  down  on 
the  other  side.  Going  up  you  require  a  great  deal  of  steam,  but  going 
down  you  don't  require  any. 

Mr.  Curtis:  There  is  another  element — the  use  of  air  brakes  on 
descending  grades.    There  is  a  great  deal  of  wear  on  descending  grades. 

Mr.  Sneath:  Well,  there  is  wear  there;  I  have  not  given  any  thought 
to  that.  1  have  read  a  good  many  authorities  that  you  could  operate  a 
road  in  the  mountains  about  as  cheap  as  you  can  in  the  valleys — ^just 
like  a  cable  on  one  side  of  the  hill  pulls  a  car  up  on  the  other  side  of  the 
hill.  I  have  read  all  the  Interstate  Commerce  Commission  reports, 
and  there  is  some  first-class  information  in  them  in  reference  to  the 
cost  of  operation. 

Mr.  Curtis:  Is  it  not  a  fact,  Mr.  Sneath,  taking  whatever  may  be 
said  as  true  about  the  winter  resistance  of  trains  over  East,  the  grades 
of  California  so  oifset  that,  as  a  matter  of  fact,  the  whole  year  round, 
to  move  a  car  one  mile  it  takes  more  coal  in  California  than  in  the  EatSt? 
A.  I  think  it  would  take  less,  on  account  of  the  grades.  The  heavy 
work  in  California,  as  I  understand  it,  is  tow'ards  the  sea;  the  grade,  as 
I  understand  it,  from  Bakersfield,  is  not  over  four  feet  to  the  mile,  and 
the  average  grade  in  the  whole  State  is  between  one  and  four  feet  to  the 
mile.  I  haven't  had  it  surveyed,  but  that  is  about  the  average  grade. 
I  took  the  railroad  time  tables  as  a  guide,  you  know. 

Mr.  Curtis:  Have  you  made  those  computations,  Mr.  Sneath?  A. 
Yes,  sir;  the  grades  of  California  I  don't  believe  can  be  any  more  per 
mile  than  in  the  Eastern  States — I  honestly  believe  it.  Now,  these 
gentlemen  of  the  Central  Pacific,  as  well  as  the  other  railroads  of  Cali- 
fornia, have  not  got  out  of  the  way  of  buying  two-bit  cigars,  and  have 
an  expensive  way  of  doing  things.  They  are  running  along  and  trying 
to  be  better  than  anybody  else,  and  the  result  is  there  is  no  profit  "here 
at  all,  no  progress  to  anybody,  and  we  think  that  the  railroads  are  get- 
ting more  than  their  share  by  a  good  deal. 


—  28i  — 

Mr.  Gage:  You  didn't  think  so  during  the  war,  along  about  the  time 
you  were  trading  and  getting  your  share  of  the  business  in  San  Fran- 
cisco— you  didn't  think  so  then?    You  were  getting  your  share  then,  too. 

Mr.  Sneath:  Well,  that  was  a  war  measure — at  that  time  we  had  to 
put  everything  aside  on  that  account.  Whenever  it  comes  to  a  crisis 
you  have  got  to  do  the  best  you  can  and  get  there  in  some  way  or 
another. 

Mr.  Gage:  Charge  it  to  the  Central  Pacific;  that  is  the  modern  way 
of  doing  things. 

Mr.  Sneath:  I  am  in  favor  of  the  Central  Pacific  getting  a  good 
round  interest  on  the  investment;  but  do  not  believe  it  is  entitled  to 
twice  as  much  as  anybody  else.  I  think  the  Southern  Pacific  Com- 
pany should  be  satisfied  with  a  reasonable  rate  of  interest.  There 
is  another  point,  in  relation  to  the  matter  of  labor.  I  notice  by 
the  report  of  the  Southern  Pacific  that  they  employ  324  men  per 
100  miles  of  road.  The  average  employed  by  all  the  railroads  of  the 
United  States  is  about  479  to  the  mile  of  road.  The  average  employed 
by  these  railroads  in  the  East  that  have  about  the  same  revenue  as  the 
Southern  Pacific,  they  employ  nearly  twice  as  many  employes  as  the 
Southern  Pacific,  nearly  twice  as  many. 

Mr.  Lansing:  Name  one  or  two  that  have  about  the  same  earnings 
and  employ  twice  as  many  employes. 

Mr.  Sneath:  I  think  it'  is  in  the  Interstate  Commerce  Commission 
reports.  I  think  it  is  in  the  second  or  third  group  where  they  have  a 
revenue  of  •I'l  5,000  per  mile,  and  where  they  employ  1,176  men  to  the 
mile  of  road.     I  think  it  is  the  second  or  third  group. 

Mr.  Lansing:  They  earn  much  more,  very  much  more,  don't  they? 

Mr.  Sneath:  They  earn  twice  as  much,  and  they  employ  nearly  three 
or  four  times  as  many.  You  take  the  Michigan  group,  Michigan,  Ohio, 
Indiana — I  forget  the  number  of  that  group,  the  fourth  or  fifth — and 
they  employ  about  twice  as  many  and  have  about  the  same  revenue  as 
the  Southern  Pacific  revenue,  about  $8,000  a  mile,  and  there  are  six  or 
seven  hundred  men,  five  hundred  and  seventy-six  I  think  it  is.  I  have 
it  in  my  pocket  book,  but  it  isn't 

Mr.  Gage:  Let  me  ask  you  a  question.  Is  it  not  true  that  you  belong 
to  what  is  called  the  Traffic  Association,  and  is  it  upon  the  figures  that 
you  are  giving  us  here  to-night  you  are  going  to  build  the  next  trans- 
continental road?  It  is  based  upon  that  kind  of  figuring,  is  it  not?  A. 
I  don't  know.  Really,  I  don't  know.  I  am  not  interested  in  the  rail- 
road. I  havn't  taken  any  stock  in  it,  and  I  havn't  made  any  figures  on 
it,  and  I  don't  think  the  Traffic  Association  has  made  any  figures  on  it. 
This  railroad  question  is  entirely  outside  of  the  Traffic  Association,  but 
I  don't  think  the  Traffic  Association  as  a  body  are  interested  in  it. 

Mk.  Burke:  What  has  that  got  to  do  with  the  question?  We  would 
like  to  get  through  with  the  points.  A.  It  is  claimed  by  the  Southern 
Pacific  folks  that  they  are  paying  a  great  deal  higher  wages  than  they 
pay  East.  They  are  paying  $1  61  for  nearly  one  third  of  all  their 
people — $1  61  for  twenty-five  or  twenty-six  days'  work.  Now,  it  strikes 
me  for  a  married  man,  boarding  himself,  it  is  not  very  good  wages — it 
seems  to  me  they  get  about  as  much  as  that  in  the  East. 

Mr.  Curtis:  Do  they  get  as  much  as  that  in  the  East,  as  a  matter  of 
fact?     A.  As  near  as  I  can  find  out  by  inquiry  in  various  quarters, 


—  232  — 


wages  here  are  not  over  10  per  cent  higher  at  most.  I  was  rather  sur- 
prised they  were  only  paying  $1  61. 

Mr.  Burke:  I  understood  they  were  paying  a  little  over  $2.  A.  I 
say  that  is  for  nearly  one  third  of  all  their  employes — that  is  the  lowest 
class,  you  know.  The  engineers,  they  pay  them  $4  32  per  day;  that  is 
very  good  I  am  paying  that  myself  for  engineers.  I  think  from  what 
I  know  of  that  businsss  that  that  is  not  very  far  out  of  the  way.  I 
don't  think  they  are  paying  for  wages  over  10  per  cent  more  than  the 
same  help  can  be  had  for  there;  but  I  can't  satisfy  myself  exactly 
how  it  is  that  they  employ  such  a  much  smaller  number,  unless  it  is 
the  fact  that  they  make  us  shippers  do  all  the  loading  and  unloading. 
That  is  where  the  whole  business  comes  in.  The  railroad  folks  do  it  on 
the  other  side,  and,  as  I  have  said,  I  can't  account  for  it  in  any  other 
way.  I  don't  see  how  they  can  handle  that  amount  of  material  Avith 
so  few  men.  But  their  argument  in  regard  to  the  cost  of  fuel  and  labor 
is  certainly  not  carried  out  by  any  figures  I  have  seen  yet. 

There  is  nothing  else,  gentlemen,  that  I  have  to  say. 

Mr.  Earl:  The  matter  stands  submitted,  then. 


REPORT  OF  COMMITTEE. 


Senate  Chamber,  Sacramento,  February  23,  1893. 

Mr.  President;  Your  Committee  on  Constitutional  Amendments,  to 
"whom  was  referred  Senate  Constitutional  Amendment  No.  8,  have  had 
the  same  under  extended  consideration,  and  respectfully  report  as  fol- 
lows, to  wit: 

The  proposed  amendment  strikes  from  the  present  Constitution  those 
provisions  establishing  a  Railroad  Commission,  and  proposes  as  a  sub- 
stitute in  lieu  thereof  the  regulation  of  the  railroad  companies  by  the 
Legislature,  as  before  the  adoption  of  the  new  Constitution,  save  and 
except  that  a  limitation  is  placed  on  the  legislative  control  by  a  uni- 
form maximum  distance  tariff  for  passenger  and  freight  service,  and 
also  a  freight  classification  known  as  the  "Western  Classification," 
comprising  a  quarto  publication  of  some  eighty  pages.  This  uniform 
distance  tariff  and  classification  is  made  applicable  to  all  the  railroads  in 
the  State,  some  thirty  in  number,  under  independent  ownership  and 
control,  regardless  of  the  length  of  the  road,  or  amount  of  business,  or 
cost  of  construction  or  operation,  or  whether  operated  in  mountains  or 
valleys. 

In  the  investigation  of  this  amendment,  your  committee  has  had  be- 
fore it  not  only  the  advocates  and  proponents  of  the  amendment,  but 
also  the  representatives  of  a  large  number  of  the  independent  roads  of 
the  State,  who  were  especially  earnest  in  unanimous  opposition  to  its 
adoption.  Various  amendments  have  been  suggested  by  the  propo- 
nents of  the  measure,  which  were  designed  to  meet  admitted  objections 
to  the  original  draft.  The  principal  one  of  these  amendments  was  de- 
signed so  to  classify  the  roads  with  reference  to  the  amounts  of  their 
respective  gross  earnings,  that  nearly  all  of  the  so-called  "little  roads" 
should  be  exempted  from  the  operation  of  the  uniform  maximum  dis- 
tance tariff  in  the  measure,  but  otherwise  leaving  their  rates  subject  to 
legislative  control.  Under  the  proposed  amendment,  if  adopted,  the 
duty  of  fixing  passenger  and  freiglit  rates  upon  all  the  roads  of  this 
State  would  be  cast  upon  the  Legislature,  but  as  to  roads  whose  gross 
annual  earnings  exceed  four  thousand  dollars  per  mile,  the  legislative 
rates,  no  matter  how  small  the  net  profits  may  be,  could  not  exceed 
the  constitutional  schedule,  but  if  the  gross  annual  earnings  per  mile 
do  not  exceed  four  thousand  dollars,  the  legislative  rates,  no  matter 
how  great  the  net  profits  may  be,  could  be  without  maximum  limit. 

Your  committee  believes  that  it  is  not  wise  to  confer  upon  the  Legis- 
lature of  this  State  the  duty  of  fixing  railroad  rates.  It  would  be  a  con- 
stant source  of  contention  at  every  session,  and  with  the  constitutional 
limit  of  sixty  days,  the  Legislature  would  have  little  time  for  the 
consideration  of  any  other  subject. 

One  of  the  main  reasons  for  adopting  the  provision  of  the  Constitu- 
tion limiting  the  sessions  of  the  Legislature  to  sixty  days,  was  the  re- 
moval from  the  Legislature   of  the  vexed  question  of  regulating  the 


—  234  — 

rates  of  transportation  companies.  The  people  have  recently  over- 
whelmingly voted  clown  the  j)roposed  amendment  to  the  Constitution 
extending  the  length  of  the  session  of  the  Legislature. 

The  adoption  of  the  present  Constitution  was  an  expression  of  the 
majority  of  the  people  of  this  State,  that  the  subject  of  fixing  rates  of 
freiglits  and  fares  should  be  removed  from  the  legislative  halls,  and 
this  conclusion  was  based  upon  years  of  experience.  The  establishment 
of  a  permanent  Railroad  Commission  was  believed  to  be  a  remedy  for 
many  evils  attending  the  election  of  members  of  the  Legislature,  and 
attending  every  session  of  the  Legislature.  If  the  remedy  has  not  met 
the  expectation,  but  has  disappointed  the  hope  of  the  people,  it  is  not 
necessarily  the  fault  of  the  constitutional  provisions  establishing  the 
Commission,  but  rather  of  the  people  themselves  in  their  selection  of 
the  members  of  the  Commission.  A  large  majority  of  the  States  of  the 
Union  have  Railroad  Commissions,  and  the  tendency  is  so  strongly  in 
favor  of  their  establishment  tbat  it  is  believed  that  in  a  short  time  no 
State  will  be  without  its  Railroad  Commission.  The  Congress  of  the 
United  States,  for  the  regulation  of  interstate  commerce  and  interstate 
railroad  rates,  has  established  an  Interstate  Commerce  Commission,  to 
which  the  entire  subject  of  interstate  rates  has  been  referred.  There  is 
no  effort  made  nor  intention  expressed  anywhere  to  abolish  this  Com- 
mission and  to  refer  the  matter  to  the  necessary  investigation  and  direct 
determination  of  the  Congress.  In  fact,  the  Interstate  Commerce  Commis- 
sion is  growing  in  favor  as  the  proper  solution  of  a  difficult  problem. 
Able,  and  fair,  and  honorable  men  compose  this  Commission,  and  there 
is  no  reason  why  as  able,  and  as  fair,  and  as  honoral)le  men  should  not 
compose  the  Railroad  Commission  of  the  State  of  California. 

The  people  of  this  State  have  the  power  to  make  their  Railroad  Commis- 
sion all  that  could  be  desired  if  they  will  take  the  care  necessary  in  the 
selection  of  the  members  of  the  Commission.  It  is  easier  for  the  people 
to  select  three  fit  men  for  the  Commission  than  one  hundred  and  twenty 
fit  men  for  the  Legislature.  The  evils  of  a  former  system  of  direct 
legislative  regulations  are  not  bo  far  behind  us  as  to  be  forgotten  or  to 
require  enumeration,  and  in  the  opinion  of  your  committee  it  would  be 
going  backward  for  California  to  return  to  the  system  that  produced 
those  evils.  Your  committee  is  also  of  the  opinion  that  to  adopt  as  a 
part  of  the  Constitution  of  this  State  a  maximum  or  other  schedule  of 
uniform  distance  rates  for  passenger  and  freight  traffic,  and  an  eighty- 
page  book  of  commodity  classification,  would  be  not  only  a  grotesque 
departure  from  the  accepted  American  idea  of  what  a  State  Constitu- 
tion should  be,  but  would  place  rigid  fetters  upon  transportation  com- 
panies in  this  State,  which  would  bring  disaster  to  some  of  the 
industries  of  California,  which  could  only  be  remedied  by  a  repeal  of 
the, proposed  amendment. 

Your  committee  does  not  believe  that  it  is  practical  or  right  that  a 
uniform  maximum  distance  tariff"  should  apply  to  all  roads  alike,  or  to 
all  sections  of  the  same  road.  All  roads  or  all  sections  of  the  same  road 
cannot  be  constructed  or  operated  at  a  uniform  cost.  To  do  this  would 
be  to  utterly  disregard  the  cost  to  the  carrier  of  its  service — an  impor- 
tant factor  in  making  fair  and  equitable  rates. 

As  it  costs  more  to  construct  and  operate  a  road  over  mountains,, 
grades,  and  curves,  and  through  tunnels  and  snowsheds,  than  over  level 
plains,  it  does  not  appear  to  be  unreasonable  that  greater  rates  should 


—  235  — 

be  charged  where  the  cost  to  the  carrier  is  great,  and  lesser  rates  where 
the  cost  to  the  carrier  is  small. 

It  is  the  opinion  of  your  committee  that  if  the  amendment,  as  orig- 
inally proposed,  should  pass,  many  of  the  short  lines  of  railroads  in  Cali- 
fornia, which  have  been  built  by  the  communities  through  which  they 
run  and  without  help  from  others,  would  be  destroyed  in  the  hands  of 
their  present  owners,  and  if  their  existence  should  continue  they  would 
pass  into  the  ownership  and  control  of  other  and  larger  roads,  and 
would  not  confer  the  benefits  their  promoters  rightfully  expected. 
Above  all,  California  needs  additional  railroad  facilities.  There  are 
counties  which  tor  years  have  been  working  and  hoping  for  railroad 
connections  with  the  larger  towns  and  cities  of  the  State. 

The  proposed  amendment,  if  adopted,  would  surely  retard,  if  it  did 
not  permanently  stop,  railroad  building,  with  all  the  advantages  of 
competitive  lines  in  California. 

The  principal  objections  to  the  proposed  amendment  have  not  been 
met  by  any  changes  suggested  to  your  committee,  and  cannot  be  over- 
come by  the  earnest  consideration  and  manifest  good  faith  of  its  pro- 
ponents and  advocates. 

Your  committee  therefore  respectfully  reports  said  amendment  back 
to  the  Senate,  with  the  recommendation  that  it  be  not  adopted. 


We  concur: 

R.  B.  CARPENTER. 
E.  C.  HART. 


GUY  C.  EARL,  Chairman. 


^ 


/ 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

Los  Angeles 

This  book  is  DUE  on  the  last  date  stamped  below. 


:S5 


AUG     3  1961 


f?r 


ii  . 


R  E  c  E ; 

MAIN.  LOAr 


VED 

DESK 


.  CT  I:  V  rf  u 

V;yJ.j^;  LOAN  DESJ 


'9I1011H12IH2I3 


Nof27l964 


P.M. 

!Ml5|o 


P.M. 

4  i  5  1  6 


Form  L9-50jn-7,'54(5990)444 


THE  LiaUAity 

UmVEItSITY  OK  CALIFORNIA 

LOS  ANGELES 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


I 


AA    001015  303 

PLEASf  DO    NOT    REMOVE 
THIS    BOOK  CARDZ 


^tllBRARYQ/r 


University  Research  Library 


